RATES

Before I call the first speaker, may I again remind the Committee that there is a considerable number of hon. Members on both sides of the House who are seeking to catch my eye in this debate. It is axiomatic that the shorter the speeches the greater the number of hon. Members who can be satisfied in this important debate. I hope that right hon. and hon. Gentlemen will take note of what I have said.

What you have just said, Dr. King, endorses the view, which I think will be generally shared in the Committee, that it is a good thing that we have taken a supply day to discuss this question of local rates. Certainly, with the rate demands going out at this moment, this is a subject very much in
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the minds of our fellow countrymen and I am sure that the Committee will feel that it is right that the House, in Committee, should discuss it.

The increases in the rate poundage of the new rates applying this year show a very substantial increase over last year. Indeed, they show, over the country as a whole, a bigger increase over the previous year than for a number of years back. Of course, they come on top of prior increases, and are the more difficult, therefore, to pay. The increases this year themselves are very substantial.

For example, in the cities of Darlington, Nottingham and Portsmouth, the rate poundage has gone up by 2s. in the £, in Manchester by 1s. 6d., in Birmingham by 1s. 2d., in Cardiff—perhaps the Chancellor of the Exchequer will have noticed this—by 1s. 9d., in Peterborough by 3s., Walsall by 1s. 4d., Rochdale by 1s. 8d., Reading by 1s. 10d., and Swansea by 1s. 4d. These are very substantial increases. Over the country as a whole there has been, on the average, a very big increase, too.

There is some disagreement, though I do not think that it is serious, as to the precise figure of the increase. The Rating and Valuation Association, The Times and I put it at 14 per cent. In a Written reply to a Question of mine which appears in this morning's HANSARD, the Minister puts it at 11½ per cent., but adds the qualification—no doubt very fairly—"as weighted by rateable value". I imagine that these are two aspects of the same thing; it depends on the basis of the calculation. It does not, unhappily, in the slightest alter the fact that these are very substantial increases.

In the Answer to which I have invited the Committee's attention the right hon. Gentleman was also good enough to answer the second part of my Question, as to what this represents by way of additional burden on the domestic ratepayer. The answer is that it is no less than £55 million. This increase falls on people who are also having imposed on them the swingeing increases in taxation in the Chancellor's two successive Budgets. The right hon. Gentleman adds, apparently as if it were in mitigation, a rather curious sentence after the reference to £55 million. He says:
1364I would add, however, that London accounts for over £21 million of the domestic increase."—[OFFICIAL REPORT, 4th May, 1965; Vol. 711, c. 144.]
I would say, as a London Member, that that does not seem to make it any better, but I think that it foreshadows an attempt by the right hon. Gentleman and by the Parliamentary Secretary to argue that the increases in London, which are very substantial, are the result of the successful effort of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) to reorganise the Victorian system of local government in London.

If that be the argument, it has already been met very firmly in a leading article in The Times this morning, which says, very pertinently:
… it is impossible to believe that the new system of government in London is all that much more expensive to administer than the old.
But if that argument is to be pursued by the right hon. Gentleman, it is interesting to note that the biggest of the London increases by a long way are in Labour-controlled boroughs.

I will not give way at this stage. I hope that the hon. Member will let me get properly started.

For example, the highest figure is that for the Yiewsley and West Drayton area of the Socialist-controlled borough of Hillingdon, where the increase is 47 per cent. or 3s. 2d. in the £. In the Hornsey area of the new Socialist-controlled borough of Haringey, the increase is 3s. 7d. in the £, which works out at 46 per cent. In the Brentford and Chiswick part of the new Socialist-controlled borough of Hounslow, the increase is 39 per cent. or 2s. 10d. in the £.

If, therefore, it is to be argued that this is all the result of the reorganisation of local government, it casts a somewhat damaging reflection on the Socialist administration of boroughs that the reorganisation of Socialist boroughs apparently is a more expensive process than the reorganisation of Conservative boroughs. [HON. MEMBERS: "Nonsense."] I would reflect that the ratepayers in those boroughs, not being inhibited by your control, Dr. King, would have used an even stronger expression about the situation.

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Nationally, it is clear how and why this has happened. The main cause is the fact that last December, the right hon. Gentleman the Minister of Housing and Local Government fixed the general grant at, allowing for a certain technical adjustment with which I need not trouble the Committee unless it wishes, the same percentage of relevant expenditure as in the previous year. With expenditure rising a good deal faster than rateable value, it was inescapable that further expenditure would fall on the local authorities and, therefore, on the rates. Indeed, the right hon. Gentleman was told so in plain terms, particularly by my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) and my hon. Friend the Member for The City of Chester (Mr. Temple) during the course of the debate on the General Grant Order.

A secondary cause which has aggravated this situation is the high level of interest rates prevailing at the moment. Local authorities have had to pay a great deal more for the money which they have borrowed; some short-term borrowing has risen even to 9 per cent. Although this is a secondary cause, it has undoubtedly added to the burden on the local authorities and has, therefore, contributed to this very serious and substantial increase in the rate poundage.

It is quite clear—I do not think that any hon. Member would wish to argue to the contrary—that increases of this order are causing hardship and will cause hardship. The Allen Committee, which was appointed by my right hon. Friend the Member for Leeds, North-East, brings out vividly the effect of rates on people with small incomes. It brings out, in particular, what a high proportion of the income of people with low incomes is taken by rates. They are clearly liable to be seriously affected by increases of this order. Indeed, one does not need the report of an official committee to know that. All hon. Members know from their own constituencies the effect, particularly on people who are retired or who have fixed incomes, of a substantial increase in the rates.

Hon. Members know this well, and I can quote on my side, at least in this, the Minister himself, for in an Answer in the House on 23rd March he said:
One of the main conclusions of the Allen Committee was that elderly people particularly
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who do not have their rates paid by the National Assistance—and it is estimated that half-a-million of those who qualify for this assistance do not apply for it—are appallingly hard hit even by a rate increase of 8d. in the £ each year."—[OFFICIAL REPORT, 23rd March, 1965; Vol. 708, c. 302.]
If they are appallingly hard hit by an increase of 8d. in the £ each year, even the right hon. Gentleman's vocabulary will be a little strained by the effect of an increase of 3s. 2d. in the £.

This is plainly contrary to what the right hon. Gentleman and his hon. Friends promised to do. Let me take, first, their General Election manifesto.

It said:
We shall also seek to lighten the burden of rates which today falls heavily on those with low incomes. While the reform of the rate system and investigation of alternative forms of local government finance may take some time to accomplish, we shall seek to give early relief to ratepayers by transferring a larger part of the burden of public expenditure from the local authorities to the Exchequer.
I ask the Committee to note the expression "early relief". Nobody would expect a root-and-branch reform of the rating system, if such would be possible, to be undertaken in a limited time, and it is because of this no doubt, that the words in the manifesto about giving "early relief" were inserted.

It did not stop there. Naturally, the First Secretary of State came in on the act. He is almost what one might call the Pledgemaster-General of the Administration. At Peterborough, on 30th September, during the election campaign, he said:
Labour is going to set up an independent inquiry to find the best way of financing local spending. That inquiry is going to take a little time, if it is to come up with major reforms. What are we going to do while we are waiting? Labour will transfer some of the burden from the local ratepayer to the Government. Education costs will be one substantial field where the Exchequer will take a bigger share of the load.
I wonder whether the citizens of Peterborough who listened to that eloquent speech of the First Secretary of State on that September evening, seven months
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ago, would have prophesised that under a Labour Government they would now be facing an increase in rates of 3s. in the £. If the people as a whole had recognised that this pledge was to remain unhonoured at this stage, I wonder whether the Labour Party would have had quite the support which it had in many areas.

I take, finally, the right hon. Gentleman the Minister of Power, who always expresses himself very plainly and very clearly. In his election address, he said:
We shall give early relief to ratepayers by transferring a large part of the burden of such heavy items as teachers' salaries from the rates to the Exchequer, and restore the percentage grants to local authorities.
Although I do not wish to weary the Committee with a great number of quotations, one thing is clear. One theme went right through all those statements. It was that during the necessary time needed to make long-term improvements, early steps, early relief and early action would be taken. I think that I hear the Minister saying, "Hear, hear". Soon after coming to office he had an admirable opportunity of taking those early steps. It fell to him, on 15th December last, to take through the House the General Grant Order which, as the Committee will recall, regulated the grant to be made from the Central Government to the Exchequer. Had the right hon. Gentleman wanted to, that would have been an opportunity for him to have given just the sort of early relief to which hon. and right hon. Gentlemen opposite had committed themselves.

Did the right hon. Gentleman take that opportunity? On the contrary. He followed precisely the percentage of the previous year and rejected a proposal put forward by the local authorities that he should at least make acceptable for grant payments the welfare services in respect of old people. It is important that hon. Members should know that he did that on plain, straight, financial grounds. He said, in the debate on the General Grant Order:
In view of the abolition of the prescription charges and the improved pension rates, which both bear heavily on the Exchequer, nobody could accuse the Chancellor of the Exchequer of failing to recognise the needs of the aged and the sick. But it was thought that the Exchequer could not make this further concession at this time. Instead of conceding
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£18 million, therefore, we have brought the welfare services into the General Grant, but maintained the aggregate total more or less unchanged by using a percentage of 55.1 instead of 56.5."—[OFFICIAL REPORT, 15th December. 1964: Vol. 704. c. 224.]
In other words, no attempt was made to give the early relief to which the right hon. Gentleman and his hon. Friends had committed themselves, although an instrument for that purpose lay to his hand in the General Grant Order. In the timetable of these matters, it fell to him, if he wanted to, to take those steps in the early months of office of his Government.

All that the right hon. Gentleman did in that debate was to grumble about the instrument, which he called "a Tory instrument". He knew perfectly well that that was an instrument by which he could have been enabled to put into the exchequers of the local authorities sufficient additional payments to check this rise in rates had he wanted to. However, on plain financial grounds he rejected the idea. It was not a question of forgetfulness, or because he was new to his office. Realising the opportunities, several of my hon. Friends who took part in that debate pointed out that fixing the general grant at that figure must inevitably result in a substantial increase in rates this year. And that, of course, is what has happened—a rise of 14 per cent., according to some figures, and 11½ per cent. according to others.

We want to know from the right hon. Gentleman what he intends to do on this subject, short-term as well as long-term. I have no doubt that when he speaks we will hear about there being, somewhere in the future, a national plan for rates. I also hope that the right hon. Gentleman, if he has any statement to make on policy, will make it at the Dispatch Box, and not—as he did last week, when we were debating mortgage interest rates—tell the House of Commons virtually nothing and then go off on Saturday to Birmingham and, in the more congenial atmosphere of the May Day celebrations, produce an important policy statement about mortgage rates at fixed figures. That method of propounding policies leaves a doubt in the minds of some people as to whether, by using an occasion which was not recorded by HANSARD, the right hon. Gentleman made the statement in that way with a
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view to the proposals not being quite too firm. In any case, we will be interested to hear what the right hon. Gentleman has to say on the broad questions of local government finance.

The Minister and his Government inherit a great deal of preparatory work from their predecessors. They inherit, first, the comprehensive review, the initiation of which it fell to me to announce in October, 1963, as well as the collection, as a result of that, of a great mass of material necessary for long-term decisions. That has been done for the right hon. Gentleman, who also, as a result of the actions of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph)—

Before the right hon. Gentleman leaves that point, and since he has complained about my right hon. Friend not having given certain information to the House, will he tell the Committee where he made the announcement in October, 1963, on the matter to which he just referred?

Of course I will. I made it at the Conservative Party confcrence—[HON. MEMBERS: "Oh."] If the Joint Parliamentary Secretary thinks that he has made a point, perhaps he will reflect that Parliament was not sitting at that time. It had not been sitting for two months. Indeed, we had not even been debating this subject, even towards the end of that Session. To try to draw a comparison between that and a statement made two days after a debate in Parliament, and withheld from Parliament, is really to suggest a rather bad conscience.

To continue with the benefits which this Administration inherited, they had the benefit of the Report of the Allen Committee, which was appointed by my right hon. Friend to go into the important question of the incidence of hardship from the rating system. The Minister also had the advantage of the interim Bill dealing with the more difficult cases of hardship and which my right hon. Friend carried through in the later stages of the last Parliament.

One can approach the general question of easing the problem of local authority finance in one of three ways: first, a general transfer from the rates to the Exchequer, secondly, a transfer of func-
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tions and the relevant expense from the local authorities to the central Government, and thirdly, measures concentrated on the points of great difficulty and hardship. There are a number of considerations which the Committee will wish to weigh. First, we are dealing here, in these days, with very large figures. The Joint Parliamentary Secretary will correct me if these statistics are no longer applicable, but, broadly speaking, I think that the transfer of £100 million from the central Exchequer to the local authorities would result in relieving the average family of about £3 a year in rates.

On the other hand, rates are deeply resented. They get people literally where they live. They are a tax which falls in substantial sums which are demanded at times of the year when many people find it extremely difficult to find the money. There are few taxes which arouse so much resentment.

I stress that the social problem is very much related to people on fixed incomes. The degree of hardship resulting from rate payments for people in full work at the high wage levels of today, certainly where there is more than one wage earner in a household, is probably not excessive, although they are resented all the same. However, for the person living on a fixed income—the type of person found in very large numbers retired to the seaside towns—the problem is very serious indeed. We must remember, when considering the social aspect of our rating system—and the Allen Report vividly illustrates this—that the problem for this type of person is a particularly acute one. As we were doing, the rating system will have to be examined.

I hope that the right hon. Gentleman or the Joint Parliamentary Secretary will comment on this, and particularly on whether the Government are considering going over from the notional rent system to a system of assessments based on capital value. I should have thought, particularly in view of what the right hon. Gentleman is doing to rents in other legislation, that notional rent will become more and more out-of-date and that there are attractions in a system of assessment based on capital value. I should like to hear the Government's thinking on this suggestion.

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Then there is the question of alternative taxes. The right hon. Gentleman is difficult to follow on the subject. He is reported at Galashiels as referring in quite an encouraging way to various alternative taxes and then proceeding, with matchless logic, to shoot each one down successively. I do not know what was the object of the exercise, but the Labour candidate lost his deposit. National taxation is at so high a level today that I can well understand the right hon. Gentleman or any other Minister hesitating to superimpose further taxation upon it. The additional taxation imposed in the two Budgets amounts to more than the total of rates paid by domestic ratepayers.

The scale of taxation is so high today, with all the effects which that must have on our economy, on initiative and enterprise, that it is extremely difficult for the right hon. Gentleman or anybody else to contemplate additional taxation. But improvements are possible in the rating system itself, apart from the one which I outlined. Clearly, there are still difficulties about valuation and the disparity between areas. It is a sobering reflection for the right hon. Gentleman, if that can happen, even when the trained and skilled valuers of the Inland Revenue are working on a national basis, that it is extremely difficult to make a comparable calculation, as the right hon. Gentleman proposes in another context, with the help of a number of well-meaning amateurs. Improvements are also possible in the rating valuation system.

There are other considerations. What we do to help local authorities should not be done in a way which encourages extravagance. There comes a point where spending money when one is not responsible for raising a large proportion of it, is an encouragement to extravagance. I do not believe that we are anywhere near that point—

The right hon. Gentleman has criticised the present rating valuation system as being inexact and somewhat inappropriate. Can he tell us what his party's proposals would be for the reform of that system?

I am in the process. I believe that anyone speaking from
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the Opposition Dispatch Box should put forward ideas.

We gave this matter great study. The review was interrupted by the General Election. We are right to put these views to the Committee and to elicit from the Government whether they accept them or not. If the hon. Gentleman had been listening to me instead of talking to his neighbour he would have appreciated that I had already dealt with the suggestion of putting rating on a basis of assessment of capital and that I wanted to hear the Minister's opinion on that.

The hon. Member is perfectly entitled to ask that question. What I am saying is that this was an idea which we were studying and which now falls to be the responsibility of the Government to handle and I want to know the Government's views on it. [HON. MEMBERS: "Answer."] Certainly. The Government have the advantage of the technical advice of the Departments on a highly technical matter like this.

Perhaps the hon. Gentleman will wait until at least I have answered his point. He knows perfectly well that these are subjects which are interesting to study, but which no sensible person takes responsibility for formally adopting as policy until they have been checked and gone into with the technical advice which is available to the Government. This is why I ask for the views of the Government on them.

Not again. The hon. Member may have the chance of catching your eye, Dr. King, but no doubt he will not improve that chance
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if he makes me take longer than I intended.

We should handle these matters by a combination of the three ways which I have indicated are possible. I am sure that there will have to be some transfer of the burden to the Exchequer and, as I have told the Committee, there is an admirable instrument in the general grant system for that purpose. I am sure, also, that we shall have to consider very closely which parts of the educational system should be transferred to central charge and responsibility.

Thirdly, I am completely certain that we shall have to look at the formulae of the general grant and the rate deficiency grant so as to give greater weight to the areas where large numbers of retired people live. I am sure that we have not got the weighting quite right in that respect, because of the fact, which is brought out most clearly now, and only now, by the Allen Report that where income is fixed and stable the incidence of rising rates is totally different from their incidence where the income is rising with the general rise in incomes.

Although there are retired people in all parts of the country, there are particularly large concentrations of them in certain areas. I am sure that the formula of additional weighting for the factor of old people living in an area can he very much improved in its efficiency from the point of view of dealing specifically with this problem. The figure I gave of the small effect of £100 million via the general grant system across the board illustrates the need to supplement the general transfer by specific help to the areas where there is hardship as shown by the Allen Committee. This is a matter of great importance and of great urgency.

Would not my right hon. Friend agree that if help is to be restricted to an area, without tying it to the individuals concerned, similar people in other areas would have to pay higher rates to subsidise the areas which he has in mind? This side of the Committee must think in terms of giving help as nearly as we can to the individual, otherwise justice will not be done.

As he has done more than once before, my hon. Friend has anticipated me.

I was about to say, when I did him the courtesy of giving way, that I hoped that the further step, consequent upon the additional weighting, must be to increase the powers of local authorities to remit rates in individual cases on grounds of personal hardship, with an adjustment of the grants in the light of it. My hon. Friend will appreciate that that, added to the general help for the areas which it is difficult to contemplate as having rate increases without hardship, will give us a pattern for dealing quickly with this particular problem.

We shall be very interested in what the right hon. Gentleman says about the long term, but I hope that the debate will not end without our hearing a good deal about the short-term measures which the Government contemplate. As Disraeli once observed, in the long run we are all dead, and that is particularly apposite in the case of a Government with a majority of four, some of whose supporters appear to be developing twinges of conscience. We must press the right hon. Gentleman even harder for early action, although we press him for his long-term proposals, too.

It is dangerously easy in this Committee to deal with these matters on paper, as statistics, forgetting that each statistic represents an individual human problem. The Allen Report brings out the anxiety and hardship now being caused by the rise in rates. The typical case is the person who retired a few years ago on what then seemed adequate provision for a decent and comfortable old age. That person has found his money eroded first by rising prices, now by rising taxation, and dreads a further increase in the rates. This sort of person has no margin at all and additional rate demands may well cause him to be driven out of his home.

That is the type of person about whom, I am quite sure, the Committee on both sides is concerned. That is the type of person who took the right hon. Gentleman's pledge seriously; to whom it meant a great deal. I have no doubt that a great many such people, in their desperation, voted for hon. and right hon. Members opposite because of that pledge. This
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year, as a result of the Government's deliberate action on the general grant, they have been cruelly disappointed. I hope that this debate will not end without our receiving from the Government a firm assurance that it will not happen next year.

I have been a Member of the House for 20 years. I have seen the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) as a back bencher on that side of the Committee and, of course, as a distinguished Minister on this. I have seen him in action many times, and I know him to be a most able performer. What I have always admired about him is that he has the capacity to talk on any subject at any time and to take any viewpoint which one cares to mention, doing it all at the drop of a hat.

That he, of all people, should be the leading Opposition spokesman to talk today about sympathy for old people and the appalling problems which rates have put upon their backs I find quite disgusting. [HON. MEMBERS: "Why?"] I shall show why. I shall give the record of the party opposite when the right hon. Gentleman and his hon. Friends were in a position to do something about it, but did precisely nothing. I intend to put on record quite clearly what they did.

There are three reasons why we are having this debate today. It is not that there is any sympathy or affection for old people on that side of the Committee. [HON. MEMBERS: "Oh."] Certainly. The first reason is that there are municipal elections on.

I say again that the first reason for this debate is that there are some municipal elections coming on and that the party opposite hopes to gain some cheap votes by raising the issue of high rates, and by trying to show that it is the champion of the poor, and the champion of those hard hit by rates. Hon. and right hon. Members opposite seem to forget that they were in power for 13 years and could have done something about it.

The second reason is that, for some time now, there has been criticism in the Tory newspapers about the ineptitude of the Opposition. I agree that this criticism has been fully justified. They have been a very poor Opposition. Only last Thursday did they suddenly come to some sort of life, when we had that synthetic, bogus speech from the right hon. Member for Bexley (Mr. Heath), who suddenly discovered that he had an affection for people who wanted to borrow money to buy homes.

The third reason why we are having the debate is that, in spite of the many unpopular measures—I admit it—that this Government have had to take, the Conservative Party is still doing very badly in the Gallup polls. [HON. MEMBERS: "No."] Yes, it is doing very badly indeed. It is against this background that the debate has been initiated and not out of any real regard for those who have to pay rates.

The right hon. Gentleman referred to the urgency of the problem, but, as I think he will be the first to agree, the rise in rates is nothing new. It has gone on steadily since the end of the war. Let me remind the Committee of the facts. During the previous Administration's period of office, rate-borne expenditure all but trebled. For 12 years the rates went on rising, and it was not until June, 1963, that the previous Government began to act because a General Election was coming. They then appointed the Allen Committee, a committee of inquiry into the impact of rates on households.

But even that Committee, although it was asked to look at the problem, was not asked to make any recommendations. What an extraordinary committee that was—asked to make no recommendations
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at all. I give credit to the right hon. Member for Leeds, North-East (Sir K. Joseph), the previous Minister of Housing and Local Government, because, when he set up the Milner Holland Committee, he let it make recommendations.

In the event, the appointment of the Allen Committee did not quieten the supporters of the party opposite, so in October, 1963, as we have heard, not on the Floor of the House but at the Conservative Party conference, a statement was made by the right hon. Member for Kingston-upon-Thames. I can almost imagine that great speech. He told the faithful that the Government of the day would initiate a review of local government finance and the rating system. So the faithful had to wait, though they were complaining bitterly against the Conservative Party's way of dealing with the problem.

To deal with the people whose rates might have risen a lot because of the 1963 revaluation, which took effect in April, 1963—I am surprised that the right hon. Gentleman did not breathe a whisper about this great Act of Parliament—the previous Government introduced a Measure called the Rating (Interim Relief) Act, 1964. What a brilliant Act. Let us have some facts about it. What did this sop do, this prayer that would make people vote for the Tories when the election came?

First, an individual had to prove that his rates had risen by 25 per cent. from 1962 to 1964–65. Second, he had to show that they had risen by at least £5. Third, he had to prove hardship.

Yes, but the individual had also to prove real hardship. In fact, after that Act has been in force for a year, the total sum paid to all these people, those in genuine hardship, the ones for whom the Act was supposed to provide, has been £100,000.

This has been the total amount paid under this great act of mercy which the party opposite instituted. In fact, of course, the Act was a piece of window-dressing, and all the speeches about it since have been a matter of the party opposite putting the problem off until a
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Labour Government came in. There is no need for this side of the Committee to take any notice at all of the Opposition when they talk about rates or the urgency of the problem.

The hon. Gentleman has mentioned only one part of the Rating (Interim Relief) Act. There was another provision whereby specific areas which were badly hit could be helped out of a sum of money set aside for their general relief. The hon. Gentleman has distorted the whole purpose of the Act by giving only one side of it.

Then I will put it in another way. He did not make much of a fuss of it. I can only say that £100,000 has been the total amount paid out in respect of those individual cases of hardship for which the Act was supposed to be designed. The Conservative Party is not qualified to talk to us about urgency. It had all those years in office, but wasted them.

There is urgency about the rating problem today. I do not deny that and neither does my right hon. Friend. As a party, we have said in the past, and I repeat now, that we must do something about the burden of rates. At least, we are saying it at the beginning of our term of office and not at the end. Not until 1963, after 13 years, did the party opposite say that there was a serious problem. We are saying it when we come into office now. We admit that the problem must be tackled.

Let me now turn to the background of rates in the past 10 or 12 years. In 1952–53, when the Conservative Party took office, the total amount collected in rates was £334 million. In the year when they went out of office, the total amount collected was £994 million. Thus, over that period, rate-borne expenditure all but trebled. It seems likely—I admit it frankly—that this year's figure will be
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about £120 million up, so that, over the 14 years, the total will have more than trebled.

What has the individual householder to pay? The picture here is not quite so black. There are more ratepayers to share the load, and, whereas in 1952–53 domestic ratepayers paid almost 60 per cent. of full rates, in 1963–64 they contributed about 47½ per cent. This was largely the result of the re-rating of industry.

Now let us look at the average rate payment per house or flat. In 1952–53, the average householder paid £17 a year, or 6s. 6d. a week. That was the first year when the Tories took office. In 1964–65, the year they went out of office, the average householder paid £32 4s., or 12s. 6d. a week. This means that the rate bills have doubled, or almost doubled, over that period.

Rates in some local authority areas are much higher than in others. At one extreme there are areas where rates per house average only 5s. a week, while at the other extreme, in Westminster, for example, the average is £2 a week. Some of this variation is due to differences in the quality of housing in different areas; but similar houses in different parts of the country attract widely different rate bills.

Turning now to the Allen Report, I wish to draw attention to the groups with the biggest increases of all who were householders. I refer to London. London carries an enormous burden in the rate bill and rate increases. During the years 1915–39, those living in dwellings in London had an average increase of £7, but 10 per cent. of the people living in dwellings in London had to pay £30 a year increase in rates. During the years 1940–63, the average householder's increase in London was £10, but 10 per cent. of those had to pay £22 or more extra.

Next, taking local authority dwellings in London, in which, we are always told, people get things on the cheap, the average increase in rates here was £9, but 10 per cent. have had to pay £19 or more extra in rates. That was during the period of office of the party opposite.

If the hon. and gallant Gentleman will allow me to make my speech, I shall give the sort of figures he wants. I am making the simple point that the Allen Report shows that the burden of rates has grown year by year under the Tory Administration and has now, we accept, reached alarming proportions. I am saying that the party opposite must take its full share of the blame.

Moreover, taking averages, rates are sharply regressive if one is poor. If one's income is less than £312 a year, the rate bill is about 8 per cent. of income whereas for a person earning over about £1,500 a year, the rate bill is an average of about 2 per cent. There is a wide range of rate payments in each income group—some households with very small incomes are spending very large proportions on rates, and conversely some households with large incomes are spending very little indeed on rates.

Let us look for a moment at the long-term trend of rates. The rise in local government expenditure has been large. In 1951–52, local authorities in England and Wales spent £842 million. In 1962–63, they spent £2,178 million. This year, 1965–66, it might be as much as £2,800 million. The continued increase in expenditure is due, we believe, to three factors: first, there are rising prices—in other words, the £ buys less and this, we think, accounts for about one-third of the increase; secondly, there is a bigger field to cover, a larger population, more schoolchildren, and so on; thirdly, local authorities have developed their services and are involved in trying to give greater service to our people.

Of local authorities' total expenditure, roughly one-fifth is met from rents and a variety of other local fees and charges. Council house rents are much the most important of these. The rest comes from taxation—from rates and from grants
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paid out of central taxes, with the Exchequer contributing rather more than half.

In 1962–63—the last year for which there are complete figures—the figures were: grants, £905 million or 41 per cent.; rates, £846 million, or 39 per cent.; and rents, etc., £427 million, or 20 per cent.; a total expenditure of £2,178 million. Last year, 1964–65, grants totalled about £1,100 million and rates about £994 million.

Even so, the major feature this year is rate increases in London. As to the figures which I have, which the right hon. Gentleman queried, the national average ratepoundage, including London is expected to be 11½ per cent. higher in 1964–65 than in 1965–66. In effect, the increase outside London is eight per cent. In the Greater London conurbation it is 20 per cent. Some individual areas have a rate increase as much as 40–46 per cent.

That is not true at all. The hon. Gentleman had better ask the hon. Member for Richmond, Surrey (Mr. A. Royle) what he thinks about the rate increase there. Thousands of people in Richmond, under a Tory-controlled authority, are protesting.

Moreover, we really must get it on record that there is no doubt that the London Government Act has been the prime reason why the rates have gone up. It was an Act which the Conservative Party introduced. The fact that the right hon. Gentleman is able to quote The Times does not take the matter any further. The fact is that anyone engaged in local government in London will tell the right hon. Gentleman or any Member opposite that the London Government Act is the cause of the steep increase in rates which we are now witnessing. It was a double blow—

Would my hon. Friend draw the attention of the Opposition to the fact that the chairman of the Finance Committee of the London County Council, more than a year ago, gave an extremely
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accurate forecast of the necessitous rise in rates as a result of the London Government Act?

I accept that. I will try to prove that the statement that I have made that the London Government Act is responsible for the steep rise of more than 20 per cent. is realistic. It was a double blow for London. The rate bills in London before the Act was passed were already tremendously high.

Before I go on I want to make it clear that we, and, I hope, the party opposite, want local government to be genuinely local. Estimates of expenditure are made and budgets framed without reference to the central Government. Local authorities are answerable to their own electors, not the Government. With limited exceptions, such as teachers and police, it is the local authorities which decide what staffs they will employ.

I cannot say with confidence exactly why these high rates have come about. But I suggest that it is for the following reasons that we find London rates up by more than 20 per cent. I put it as an individual point of view. First, there was the inevitable dislocation—

On a point of order, Dr. King. Looking at it from the point of view of the Committee, can we have an official statement from the Dispatch Box by a Minister, on behalf of the Government, when he weakens the point that he is making by saying that he is giving his personal point of view? Surely we are entitled to the Ministerial point of view on this matter. Surely it is not fair to the Committee for the statement to be diluted by the Minister stating that what he is putting forward is not the official answer.

It is not for me to say whether that is a valid point of view, except that it is impossible for any Government at this time, when rates have just been decided, to say why they are so high. One has to wait for the detailed expenditure. Anyone with knowledge of local government would know that.

One of the first factors which hon. Members opposite must take into account in regard to the rise in London rates is that the Greater London Boroughs have, first, to pay for assistance to the rump of Kent, Essex and Surrey left out of
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the Act by the Conservative Party. Second, there was the inevitable dislocation caused by the Act.

Third, the services have now been broken down into 32 units instead of many of them being centralised as before, and they must cost more to administer because of that. This only confirms the view expressed by those of us then in opposition when the Bill was going through the House. We pleaded with the Government of the day to recognise that the services would not be so efficient because they were being broken down into many units and we pleaded that they would cost more. Our predictions have been proved correct.

Fourth, the rates have gone up heavily because inexperienced authorities have overestimated for the services for which they have to cater in the coming year. These authorities have never handled the children's service, the health service, the welfare service and so on. How could they make their estimates? They have virtually done so in the dark. They have probably felt that the safest thing to do was to take the estimate prepared for them and add a little more to make sure that it was sufficient.

The final factor has been overenthusiastic expansion of some of the services, leading, I believe, to an inflation of some of the staffs. We shall find out as time goes on whether my predictions are right. However, these are the reasons why we have in London alone rates which have gone up by more than 20 per cent. I state, on behalf of the Government, that this is primarily the consequence of the London Government Act. Otherwise, there could be no reason why, outside London, the increase should be 8 per cent. and inside London more than 20 per cent.

We have had the right hon. Member for Kingston-upon-Thames getting up almost with tears in his eyes and telling us about the terrible rate burden at Hornsey, where there has been a 40 per cent. increase. This is monstrous when one realises that it can be shown that the increase in the rates in London is primarily the consequence of the Conservative Party's Act of Parliament.

One thing I am certain of is that the situation in Kingston has nothing to do with the right hon. Gentleman. I do not know how well the Kingston-upon-Thames Council is served; perhaps it needs good services. Nor do I know whether the services of its treasurer are responsible for this. An investigation will find out. All I can say is that I am sure that the right hon. Gentleman has nothing to do with that council, or else there would not be any council.

It is clear from the London situation alone that the completion of the Government's examination of local government finance is a matter of great urgency. But I want to make it clear to the House that even if that review were completed tomorrow, nothing could be done in the current financial year. It is obvious that such increases cannot go on. I believe personally—here, I hope, I carry most hon. Members with me—that there is a limit to what ratepayers can take. I accept that and I know that my right hon. Friend accepts it. We believe that in many instances the limit has already been reached in certain areas. My right hon. Friend is watching the effects of the London Government Act to see whether the people of London are getting value for money for the large increase in rates.

It may well be asked on this side of the Committee why the Labour Government did not alter the London Government Act in order to avoid the implications which we predicted when in opposition and which have now been proved true. I will tell the Committee frankly why we did not do it. We came to office in October last year. The first thing that my right hon. Friend did was to initiate an inquiry among the local authorities of the Greater London area to see whether certain services could be transferred back to the central authority. Our main concern was to ensure that the children's service was maintained at the very high level at which it was passed over to the local boroughs. My right hon. Friend was worried whether that service alone would have the same continuity as it had had in the past. So we made inquiries of the
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Greater London boroughs, and we found that we could not get any unanimity, and that there would have been grave arguments from some of them if we had tried to alter the situation.

Secondly, we found that the Greater London boroughs had appointed their staffs—their town clerks, deputy town clerks and other officers. However, the final deciding factor for my right hon. Friend was that whatever we did had to be introduced into the House of Commons and go through all its stages, including Standing Committee, and be law and on the Statute Book well before 1st April. It would have meant a complete reorganisation of London, and it would have meant complete dislocation. I believe—I am sure that I speak for all who have studied the London position—that my right hon. Friend was right to say that, in view of the time factor, much as we disliked the Act, and although we knew that it created very great difficulty for our people, we were right to leave the position as it was.

However, my right hon. Friend wants to make it clear that this is an Act which he will study closely. We shall watch whether the people in London get the increased services which they are entitled to expect from the increased rate, and he reserves his position as to whether at a later stage, if this is not achieved, to take action to amend the Act.

I am well aware of the difficulties in reorganisation about which the hon. Gentleman speaks, but will he note that he did not need to put legislation through this House in the way that he has said he had to do? The point made by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) was that the instrument of the general grant was at his right hon. Friend's fingertips. When the right hon. Gentleman introduced this provision on the basis of last year, all he had to do was to increase it by 2, 3, 4 or 5 per cent. That was all that the Minister had to do, and he has failed to do it.

I turn now to the future as we see it. The Government are not yet ready, I say frankly, to announce their proposals for future changes in local government finance and the rating system, but the examination is well
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advanced. I know that the Conservative Party claims that all this should have been done within six months of our taking office.

I do not have to explain to the House of Commons, I hope—I am sure that I do not have to explain to the country—why it has not been possible in the short time that we have been in office to get this done. But some of the problems and some of the canvassed solutions are well known, and it will do no harm if I rehearse some of them. I have no doubt that some of my hon. Friends will have some constructive suggestions to make if they are able to take part in the debate. Perhaps we may get some really constructive suggestions, apart from the simple one from the Opposition that one just throws in more exchequer money.

The terms of reference of the Allen Committee were very restrictive, and the Committee produced no recommendations. But the Report pinpoints one or two of the major issues which we have to face. The first is the relative burden falling on households with the lowest incomes. Rates are shown as taking, in 1963–64, 8.1 per cent. on average of the incomes of households with less than £6 a week and 6 per cent. of the incomes of households with £6 but less than £10 a week.

Some of the households are on National Assistance Board benefits, and they will get some alleviation. But there are very many families who do not get such benefits, although they ought to qualify. They pay well over and above the national average in rates, which is 2.6 per cent. Suppose that we decided to reduce the rates of these families so that they took no more than the present national average proportion of income. How should we do it?

One way would be, as the hon. Member for Ilford, South (Mr. Cooper) has said, to increase the general grant. One could increase it by £X million, but, in fact, to increase it by £700 million to £800 million would only meet a third of the present bill. This would represent something in the region of 2s. in the £ on the standard rate of Income Tax. Another difficulty would be that if you did it half the benefit would go to industry, to commerce and other non-domestic ratepayers. Indeed, on the
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Allen Committee's figures only about 7 per cent. of the benefit would go to households with under £10 a week; and these are the people we are trying to reach. The Opposition's approach, saying £X amount from direct grants or £X amount should be found from the Exchequer, is glib. Households with £30 a week or more would get more than twice as much benefit and rates would be taken, on average, at the rate of only 1½d. in the £ from them. The under £10 a week households provide at present only about 7 per cent. of the total rates collected. If we could find a way of channelling the help to them alone, the cost of, say, halving their bills would be roughly, £35 million to £40 million. My right hon. Friend is seriously considering how to do this, but we have to be sure that this is the right sort of way in which this sort of money is, in fact, to be paid and that it will go to the people who need it badly.

There are many people who are not getting National Assistance benefit, but who ought to be doing so. The Allen Committee said that 800,000 people were paying rates who qualified for National Assistance benefit. This estimate was thought to be rather high, but even on a conservative examination I am told that the minimum would be at least half a million. These people who are entitled to National Assistance Board benefits for the relief of rates ought to get it. They ought not to regard it as charity.

I have said before in an Adjournment debate, and I repeat it, that the National Assistance Board is prepared to send an officer to the home of any person concerned privately and discuss it. There will not be any publicity and at the end of the day, if he gets the Assistance Board grant, he will receive a book in the same form as an old-age pension or family allowance book. He is getting no charity; he is only getting what he has earlier paid for and for which we are paying today.

I make it perfectly clear to the House that my right hon. Friend does not rule out the possibility of a scheme of selective rate relief. It is one of the matters high on his list of priorities for a decision. We shall listen carefully to suggestions which hon. Members may make during the course of the debate. The rates prob-
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lem is not only confined to the lowest income groups. The Allen Committee remarked that some householders are as much concerned with the impact of rates in the future as in the present. They may be able to cope with the existing rate demand and just get by, but they are afraid that if rates continue to rise in the future, as they have done in the past, they will no longer be able to continue to make ends meet. This is not only a problem of the low-income groups but it is also the problem of the retired.

How can this future trend be checked? Various ways have been suggested. First, in 1957, the Tory Government concluded that it was not practicable to devise the satisfactory new source of local revenue—this is in Cmnd. Paper 209. We are not so sure on this side of the Committee that this is so. It may be that the difficulties are great, but my right hon. Friend has not given up the idea that there are other forms of local government revenue. Second, the Government could take over some of the local government functions. We do not dismiss this idea, but we certainly have no desire to reduce the status of local government by taking away its responsibilities. There is, moreover, always the dilemma that if a transfer of services is to make a worth-while impact on the rating problem it must be a fairly substantial service.

A third possibility is an increase in Exchequer grants. I must say the Opposition's approach to this is a most entertaining one. Looking at their own Cmd. Paper 209, about which my right hon. Friend appears to have forgotten, it will be seen that they cut Exchequer grants by £20 million in a year. They tried to justify it, but I ask hon. Members opposite to read their own Command Paper. Perhaps when the right hon. Gentleman who, I understand, is to wind up the debate, replies, he might explain that paper in the light of what the hon. Gentleman said earlier. How, today, can they demand greater Exchequer grants when, in 1957, they cut them by £20 million because they said they did not want local authorities to be too dependent on the Exchequer?

The changes that have been considered in relation to rating relief and local government are well known and have been repeatedly discussed. The answer has been the same—that any change would only be a change for the worse. I hope very much that the Government will not be forced to the same conclusion. Nobody can be satisfied that the present rating system is incapable of improvement. We are determined to do the very best we can, within the review that is now going on, to try to find a solution to this problem.

Are we still right to be using rents as the basis for assessment in an age when the proportion of owner-occupiers is creeping up and the rent obtained for a large proportion of rented properties—those municipally owned—are pretty useless for the purposes of rating valuation? What shall we use in their place? How would a change affect the relative rate burdens of old and new dwellings? How would it affect flats, bungalows and houses, and so on? These are many of the questions which we have to study in the context of the present rating situation.

Then there is agricultural derating. Should we go on with this? This is the last big field of exemption. Do any farmers opposite want to make a contribution? These are some of the problems, and we set them out neither as threats or promises. It is perfectly true to say that a great number of pledges given in the Labour Party manifesto have not yet been honoured, but there are some which have been implemented. The first, of course, was security of tenure. There are about 300,000 families in south-east England alone who will be grateful for what the Labour Government have already done.

I would challenge the Committee now to produce cases of people threatened with eviction. The hon. Member for Chelsea (Captain Litchfield), who I am glad to see is here, alarmed and worried as he is, is a good case. Is he getting letters today about fears of eviction from his constituents? Let it go on record that we have implemented security of tenure. We have introduced the Rent Bill which is now before the House and is, we believe, a genuine effort to establish a better relationship between landlord and tenant.

We are committed to dealing with the leasehold problem, in a Measure which
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will come before the House very shortly. We are committed to lower interest rates. We do not deny this and it will certainly be done. We are to introduce legislation establishing a Land Commission. I am talking of matters which are of direct concern to my own Department.

The party opposite will be pleased to know that at any rate the first efforts of the Labour Government, to stabilise the £, have at least had some success. Today, the £ is stronger than it has been for the past 12 months. Shortly after my right hon. Friend the Prime Minister took office a 7 per cent. Bank Rate was imposed, for the reason that we and, I think, the country understand. This is because the gold figures were going so badly against the Conservative Government.

Taking into account the background of what the Government had to do when they first took office, I say, on behalf of my Department and on behalf of my Government, that the pledges written into our manifesto will be redeemed. The Tory party might expect, but certainly the country does not expect, that we shall do it within six months. We ask for nothing more than five years of office until we can go to the country and say, "On housing and finance and everything else, this is the situation which we inherited and this is what we have done; we ask for no more than a fair comparison."

I must say that I marvel at the attitude of hon. Members opposite who so often claim to be the truly patriotic party. At their meetings there is the Union Jack and there are pictures of the Queen on the table. One of the representatives of this true patriotic party, the right hon. Member for Wolverhampton, South-West (Mr. Powell), has just made a second speech appealing to industrialists not to co-operate with the Government. I would have thought that that was first-class sabotage.

I happen to represent a dock workers' constituency. Never during the 13 years that the Tories were in office did I ask my dock workers to withdraw their labour? In fact, again and again I pleaded with them to make sure—

I am trying to show that the party opposite, which claims to be the national party and the patriotic party, has already done a great deal, as it did last week in a debate on homes—and now we have this love and affection for those who are paying high rates—to follow the example of that speech, which made it quite clear that the right hon. Gentleman wants to sabotage the efforts of the Government. I was giving an example, as I am entitled to do, and I was saying that ever since I first came to the House I have never done such a thing, because I happen to believe in democracy.

The Chairman

Order. I do not question the veracity or otherwise of what the Parliamentary Secretary has said, but it has nothing to do with the Vote under discussion.

We on this side of the Committee make no apology for the fact that in six months we have taken some unpopular measures. These have been an inevitable consequence of the economic situation which we inherited. We are committed to do many things in housing—a reduction in home loan interest rates and building houses better and faster. Those things we shall do. We are entitled to expect from the country a period of time in office to do these things. I have no doubt about the future. The truth is that the party opposite rather dreads the future.

Attack is the best means of defence, but the Parliamentary Secretary's attack was extremely weak. Nothing he attacked could cover up the fact that words and promises before the election and deeds afterwards in Socialist circles are as different as chalk from cheese.

I am interested in local government because for the last 11 years I have represented a constituency which has a very high proportion of retired people. For some time I have been aware of the increasing burden which has been placed on the retired householder and his capacity to pay. Hence, with many of my colleagues I pressed for an inquiry into the rating system in 1961. We continued to press the Government to get the Allen Committee set up and to give some interim
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help until such time as action could follow the Allen Committee's proposals. I know that many of my constituents have every reason to be very grateful for the Interim Rates (Relief) Act which was introduced by a Conservative Government and that they will be surprised to find how summarily it was dismissed by the Parliamentary Secretary this afternoon.

Now we have the Allen Report. Like many others, I pay tribute to the detailed work which has been done by the Allen Committee in the collection of statistics and in the way in which the Report has been assembled. The great contribution of the Committee has been to remove any doubts about the basic facts of the 1963 revaluation and the rate burden. I am glad that that Committee underlined in no uncertain terms that there is poverty and hardship among the retired. Of course there is. My reason for speaking in the debate is exactly the same as when I raised this matter in 1961—to see that action is taken as soon as possible to help this very deserving section of the community.

The Allen Committee rightly pointed out that more than 40 per cent. of retired householders spend more than one quarter of their income on housing and housing costs and that for more than 5 per cent. of the retired housing costs even exceeded half their income. It said that 5 per cent. of retired householders had had an increase in rates too heavy for them and that 5 per cent. represented 200,000 to 250,000 householders. I am sure that many of them live in seaside areas similar to my constituency in north-east Essex, with little to no industry.

It was the knowledge that such action to help was needed which led me to say in 1961 that the attitude to the payment of rates by the retired had become not so much one of anger as one of despair. That is why I put down a Motion pressing the Minister for early publication of the Allen Report. It was why I put down a Motion, which has been signed by 41 of my hon. Friends, asking for immediate action to be taken to see that a part of the cost of the education burden is eased off the rates.

In spite of their categorical promises about early relief, the Socialist Government so far have done nothing, in spite of the Allen Report underlining where the
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hardship lay, particularly among the retired. The Labour Government could easily have implemented their pledge to give early relief to ratepayers when they fixed the general grant to local authorities for the years 1965–66 and 1966–67 simply by raising the proportion of local government spending covered by the Ex-chequer grant. At present they have chosen to do nothing. What a great difference there is between Labour promises at the election and what the Labour Government do afterwards!

An important factor in this increase in rates of more than 14 per cent, on average for the country as a whole is the higher interest rates which local authorities are having to pay on borrowed money because of the Labour Government's action in raising Bank Rate to 7 per cent. Clearly, some action must be taken very soon. In the meantime, all the Government do is to appoint a committee to look into the financing of local government. Surely enough evidence is available for them. When will the Government review be completed? Is this review just a ruse to buy time because of the Government's failure to run the country's finances properly.

The Liberals' panacea—[HON MEMBERS: "Where are they?"] As the Liberal Party is not here, I will only say that the Liberal panacea appears to be to rush for site value rating on the basis of the Rating and Valuation Association's Report at Whitstable and published in February, 1964. The main result of this survey was to show that under sites value rating open spaces and golf courses would have to pay 80 times as much in rates as at present, hardly a practicable proposition. Moreover, much of the open spaces belongs to local authorities, so there would be no gain to ratepayers from an increase in rates on this sort of property.

More recently, a report of the Royal Institution of Chartered Surveyors, which was published in November, 1964, stated:
We are convinced that a system of assessing owners on the basis of values which they are for various reasons unable to realise would lead to substantially more widespread hardship than that which is found under the existing system.
In a pamphlet published in 1962—perhaps the Liberal Party has forgotten this
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—the Liberals gave scant praise to site value rating.

I have never been able to understand how some parts of the nationalised industries have escaped paying rates because they were making, as it was claimed, a financial loss. I have in my constituency a railway port, Parkeston Quay, Harwich. For many years, trade through the port of Parkeston Quay has been increasing. Indeed, over the last few years it has doubled. Yet, because the accounts are done on a national basis, a loss is declared for rating purposes. I have been many times to the railway authorities to ask them to publish the accounts separately, without success.

In Harwich town itself, a new quay has been built by a private enterprise firm, and it will, of course, have to pay rates. Is it right that a nationalised undertaking should get out of paying rates while a private enterprise firm only a few miles away pays them willingly, and makes a good profit, too?

I was referring to the Railways Board. Will the Minister look into this matter and press the Board to publish separate accounts for Parkeston Quay so that it can pay its fair share of rates to the local authority?

Dealing with the question of rates in its broader national aspect, it is clear that we are faced with greatly increased spending demands, particularly for education, which may mean an increase in rates of about 10 per cent. per year for the next five to ten years. Such increases are very heavy burdens, not only for retired people, but for the rest of the community, particularly as we know that the norm for an increase in pay is 3 to 3½ per cent. Few people in north-east Essex and similar areas will get that kind of pay increase. And in spite of everything that has been said about being able to achieve a 4 per cent. increase in production, judged against this performance of the post-war period, surely a 2½ per cent. growth rate is much more realistic for planning purposes. But already the Government have increased central taxation by £1,000 million a year. Is there any ground for believing that there is spare taxable capacity left to
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those most badly hit, particularly those whose incomes have remained relatively static, such as retired people?

It has been estimated that to relieve those with incomes of under £512 a year from paying rates altogether would cost the Exchequer £60 million a year. But in doing this, necessary as it may be, surely we would put an additional burden on those creating the wealth of the country—young married couples, scientists and technicians. Sooner perhaps than many may realise, we shall be killing the goose which lays the golden egg. Such transfers can be done, but—and let us make no mistake about it—the cost of Socialism is becoming too high, particularly when with modern communications we know so quickly what is happening thousands of miles away. There is a grave danger that heavy taxation and rates will drive skilled people to seek their fortunes elsewhere.

For these reasons, I ask whether the plans which we have before us are too ambitious, particularly when they are measured against the financial failures of the Government. Can we afford the present degree of expansion which—and let us face it frankly—the Labour Party, when in opposition, promised to fulfil and to increase? Are not the financial failures of the Government forcing us to phase some of the programme over a longer period?

I am very anxious to answer the hon. Gentleman's question. Is he asking me whether, in my view, the aim of largely rebating old people's rates is too ambitious? Is his argument that we could not possibly afford to do it? If not, I have misunderstood him.

If the right hon. Gentleman had paid more attention to what I was saying, he would have realised that that was not the point I was making. I was saying that it is possible to find the £60 million, but that in doing so we might put an additional burden on the rest of the community and that, therefore, a better course perhaps would be to try to cut back on Government spending in view of their failure to run the economy of the country.

This is for the Government. The Prime Minister himself has said that it is for the Government to make proposals. If the Government find that they cannot run the finances of the country in the same way as we can, then they will have to make economies.

Has not the time come for reform to see that help goes to those who really need it? Surely the Government should not try to do for some people what those people can perfectly well do for themselves. Are not the Government, by the 14 per cent. increase in the rate burden—the largest increase which the nation has ever had to face—hitting those who in the past have done their best to help themselves? The truth is that we cannot have our cake and eat it.

No one knows more than me, having been a Member of Parliament in a country division in Essex for 10 years, how necessary it is that my constituents should have more schools, more hospitals, more roads, better water supplies and much else besides. But there comes a moment when local resources are overstretched. That moment has come in north-east Essex and many other similar areas. Indeed, it was reached some time ago. But, according to the figures in the Allen Report, written before the vast increase in national taxation, that moment has not been reached nationally.

That is why I ask for a proportion of the education charge to be borne by the Exchequer. I know that my division, being an area with little or no industry and having a high proportion of retired people, cannot afford the present increase in rates, let alone the next round of increases which will be thrust upon it. The incomes of retired people just do not expand in that way.

I trust that the Minister will bear in mind these points which are vital to north-east Essex and similar areas. I hope that we can expect some early action to fulfil the promises made so widely and earnestly during the General Election campaign. I am sure that what we want to achieve is fairness, not only between one ratepayer and another, but
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between ratepayers and taxpayers in paying for local government services. But what we want over and above all is honesty and straightforwardness on the part of those making policy and an assurance that they will not make policies which they know, or should know, are beyond the nation's resources to fulfil.

I have listened to the hon. Member for Harwich (Mr. Ridsdale) with some interest. He started by saying that a substantial proportion of the expense of the rates should be shifted to the Exchequer. If he were pursuing a policy of honesty and political straightforwardness, one would then have expected him to say that there must be increased taxation to pay for that. If he had said that to relieve the over-burdened ratepayer we should, for instance, put another 6d. or even 3d. on Income Tax, that would have been honest and straightforward. That would have told us honestly and straightforwardly from where the money was coming. But the hon. Gentleman did not do that. He jibbed at it. He realised that, while that would satisfy a substantial section of his constituents, it would horrify another section.

Then the hon. Gentleman referred to the Government's reduction of some services, which he did not specify. The hon. Member said that the Government must find the money for them. Apparently, it is not to come from the Health Service, from the pensions of old people or the other increased benefits. Those were increases that the party opposite did not oppose. It is true that they opposed the taxation to pay for them, but they did not oppose the increase in the social services. If there is a suggestion that we should cut down certain services, on the basis of honesty and straightforwardness of which the hon. Member has spoken we should he told what those services are. If it is suggested that these proposals should be met by an increase in taxation, we should be told.

I will return to that later in my speech. First, however, I wish to try to bring the question of rates into proper perspective. In my city of Birmingham, the increased rate will mean that the domestic ratepayer pays an average of about 12s. 2d. a week. This payment
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for rates includes the expensive education bill, payments for protection by the police and by the fire brigade, for the construction and maintenance of roads and public lighting, the collection of refuse and disposal of sewage, the public health functions performed by the local authority such as midwifery, child welfare, domestic helps and ambulances, all of which are paid for by the local authority, parks, art galleries, museums and libraries and a large number of other sundry services.

All these are paid for by rates at an average cost for each man, woman and child equivalent to the price of a packet of cigarettes.

It is rather less than the cost of a large packet. It can be said that nobody spends his money and gets better value for it than does the ratepayer. Let us understand that to begin with.

At the same time, however, there has been growing resentment about the burden of rates. Some of the reasons for this have already been mentioned. One of them is the regressive nature of rates, particularly for those on small incomes. This is an aspect which has already been mentioned. The effect of rates upon retired persons has been referred to in the Allen Report and in the debate today. Whilst the rating system before, say, the First World War was probably a fair system in the sense that the cost of occupation of rented property in those days corresponded roughly with the income of the family, today that has to some extent ceased to be the case. Where there is not a free market in housing, where there are in many cases quite inflated rents and where there are heavy mortgage repayments for capital and interest, the rating system has ceased to be a reflection of the income level of the person who pays.

Another aspect is the great increase in rates which has already taken place. My hon. Friend the Joint Parliamentary Secretary mentioned the trebling of the rate figure, which has risen much more than income. One hon. Member has asked how the increase corresponds with the rise in the national income. The answer is that it has been rising at a
1399
much more rapid rate than either the national income or the average income. Its rate of increase has been between 9 and 10 per cent., which is substantially more than the average annual rise in the national income. That is one of the reasons why there is resentment.

Another reason is that the increases in rates come on top of rents, which in many cases are very high for the occupation of rented property, and on top of high mortgage repayments. Sometimes the tenant regards the rent that is charged by the landlord as an act of God about which he can do nothing, whereas he resents bitterly the taxes which are imposed upon him by the local authority. The main point is that one burden comes on top of another and that, even if the rate increase is substantially smaller than the rent increase, the tenant is apt to regard it as the straw which breaks the camel's back, and one easily understands how he feels about it.

It should not be forgotten, however, that for many individuals the additional cost of rates represents a much lower burden than tenants have had to pay for rent as a result of the decontrol of large numbers of dwellings. Another point is that in the localities, rates have become a political and electoral issue. When rates are increased, it is sometimes suggested that the local council has been profligate and has wasted vast sums of money. That is usually a bone of contention at municipal elections. There is no doubt that by and large it is nonsense, because the expenditure of a local authority is largely predetermined. For example, teachers' salaries, the number of teachers, the cost of the police and of the fire brigade—indeed, pretty well all the wages bill, which accounts for much the largest part of the rate burden—are determined by circumstances or by negotiating bodies outside the control of local authorities.

I have been carefully following the hon. Member's argument and I agree with his remarks about certain expenditure being predetermined. Would he not agree, however, that among many ratepayers who analyse their rates part of the feeling of resentment at the ever-increasing cost is the fact that certain
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items and increases are laid upon them by the Government often with no kind of direct grant aid, with the result that the local authority is quite powerless in the matter?

The trouble is that that is not what the Tory Party has said at municipal elections. For the past 13 years, at council elections the Tory Party has said precisely the opposite. The Tories did not say that costs were imposed by the Government and that there was nothing that could be done about them. When we had a Labour council in control, however, hon. Members opposite said precisely the opposite and blamed the increases, not upon the Government, but upon the local authorities for wasting money. The argument advanced by the hon. Member may be true to some extent, but it is precisely the opposite of what has been put out in the past in Tory propaganda.

There is not any great and substantial difference in rating between the larger authorities, irrespective of their political complexion. Although in one or two instances it may be suggested that a local authority has undertaken an unwise scheme, the largest part of the rate burden is accounted for by items outside a local authority's province. I am glad that the hon. Member agrees with me on that.

The present system has two defects. One of them, to which reference has already been made, is the intolerable burden which is imposed upon the classes of ratepayer whom various hon. Members have mentioned: for example, people who are below the National Assistance level but who are not receiving National Assistance, retired people and those generally with low incomes. One danger which has not been mentioned, however, and which, perhaps, is equally great is that the resentment of the increasing rate burden may result, and is, in fact, already resulting, in restraint upon the extension of the essential social services which should be expanded in a civilised society. The fact that rates have become a cockpit of politics means that in many councils these social services are not being expanded to the extent they ought because people are afraid of the political and electoral consequences.

For this reason, I think that it is important that some steps should be
1401
taken to resolve the rate problem. There are long-term solutions. The representative here of the Liberal Party, the hon. Member for Orpington (Mr. Lubbock) may support the rating of site values. I should think that, as a long-term solution, it might well be considered, though it has many drawbacks and I am sceptical about it, but I believe that the experiment in Whitstable should be extended to some industrial areas, where, of course, the conditions are quite different. Whatever may be said for or against it, its value will be largely long term. Then there is local income tax, which has many serious drawbacks and difficulties.

However, I want to talk about some things which could be done in the near future, and first there is the question of a rebate scheme. I have discussed this matter with people interested in local government, and I am assured by rating authorities and local treasurers that a rebate scheme is completely practicable and could be put into operation without considerable difficulty.

Something has already been said about the position under the Rating (Interim Relief) Act, but I can say that in the City of Birmingham the total amount of relief given is £700. That is peanuts. It simply does not touch hardship at all. That is not because the local authority is unwilling to help. It is because, as the law now stands, apart from that rating relief Measure, the only basis upon which relief can be given is poverty. That puts the question of what is poverty. It is quite clear that there will have to be a new and wider expression or definition of what we mean by that; a definition extended to mean hardship, and perhaps it might well be extended to help anybody whose income is less than £10 or £11 a week. I believe that local treasurers are sympathetic to that.

How is the cost to be met? I think that more of it should come from the Government. People in Birmingham think that perhaps the rate deficiency grant system ought to be reconsidered—perhaps that is because we in Birmingham are at the wrong end of the stick. But it is based upon valuations which in many cases are not realistic and not comparable. Again, I would suggest that it may be that a part of the deficiency grant should be diverted towards helping rebates in individual cases, because it is
1402
not a question, as one hon. Gentleman said just now, of giving global assistance to a local authority but assisting in individual cases. Therefore, I mention the rebate scheme, which I hope will be urgently considered by the Government, there should also be some shift, I think, of financial expenditures to the Government. Obviously that would affect the burden of taxation. That cannot be helped; but I think it is a fairer way of meeting some of these expenditures.

In their present financial situation, and with the grave problems which they have inherited, obviously the Government cannot be expected to do very much very soon, but I would suggest that the Government ought to intervene to the extent of keeping rate-borne expenditure from rising beyond shall we say, 4 per cent. or 3½ per cent. which is the sort of increase considered by the Government to be appropriate in their incomes policy. It seems proper that we should give relief in this way. As I say, we are not expecting too much, not expecting a massive injection of Exchequer capital, but the Government ought, at any rate, to give relief to the extent which will ensure that rateable expenditure does not extend beyond 3½ per cent., which is the basis of the national incomes policy. After all, if we say to people, "Your income should not rise beyond 3½ per cent." then it is quite obvious we ought not to increase their rates beyond 3½ per cent.

With the coming problem of an increase in teachers' salaries, for instance—an increase which is long overdue, and a problem which, I hope, the Government will deal with very shortly—we are bound to have a substantial increase in local government expenses. So I hope that the Government will bear this point very much in mind.

It is sometimes said that if the Government bear too much of local government expenditure the local authority loses control and there tends to be a shift of greater control to the Government. I do not believe that. In fact, we can sometimes get a local authority continuing to pay while largely, losing control. For instance, watch committees now are virtually losing control of the police forces, and the only authority which really remains with the local councillors is that of paying a large part of the bill. I
1403
mention this simply to show that the mere fact that we transfer the responsibility for meeting expenditure does not mean necessarily transfer of control.

I have mentioned the rating of site values. There is one feature of this which I find attractive, and that is the rating of void properties, and I hope the Minister will seriously look into that. In Birmingham there is a large amount of office space in buildings some of which are already assessed and some of which remain unassessed, and, of course, are not yet occupied. It has been estimated that the local authority is losing in actual rates some £800,000 a year—that is, on offices and industrial property alone. I believe that a substantial part of that should be paid in rates. I think that in Scotland there is already provision for this for up to 25 per cent. payable on void properties. I would put the figure rather higher.

It may be said this would be a disincentive to builders to build this sort of property. At the moment that would be all to the good. If it were to result in the diversion of building materials, and especially of building labour, which is in short supply, from the building of offices to the building of houses that would, in present circumstances, as a short-term measure for the next few years, be a good thing. It would also be an incentive to property developers to let their offices at more reasonable figures, and I think that that is altogether desirable.

These are some matters which the Government ought to consider which are dealt with in the general review. I have mentioned short-term measures rather than the long-term measures which undoubtedly would help solve the problems of the local authorities, and not only the local authorities but those of that section of the population which is hard pressed by rates.

I am pleased to follow the hon. Member for Birmingham, Aston (Mr. Julius Silverman), and I hope to take up one or two of the points made by him. There is a great deal in what he says about local authority spending being largely predetermined. This is especially so in regard to essential social services, but it is far from being entirely so. There
1404
is a great deal of local decision with regard to spending and the burden on rates.

The hon. Gentleman mentioned void properties. I think that here is something on which there can be considerable savings to the local ratepayer, and a local authority such as mine in Newcastle, which is undertaking an enormous redevelopment plan, can save quite a bit by planning its finance carefully and not vacating properties and areas too far in advance.

I was very interested in what the hon. Gentleman said about local income tax, but I think that we on this side of the Committee have been told a number of things which we knew already. The hon. Member for Bermondsey (Mr. Mellish) was not telling us anything that we did not know when he said that the question of easing rates was not as simple as transferring the burden to the Exchequer. I think we knew this very well when we were on the other side of the House, and it is now generally accepted that rating revaluation as such had to be done in the name of commonsense, and that its effect in some ways was going to be, and indeed is, very severe.

The decision of the last Government to set up the Allen Committee to look into its effects was sensible, and I believe that the Committee's findings are a good basis on which to start considering the difficult problem of raising local taxes. Constituencies such as mine, in which there are large areas of big Victorian and Edwardian houses, in many cases under-occupied, are dealt with sympathetically and intelligently by the Allen Committee, and I shall say a little more about this later.

We on this side of the Committee appreciated that this was no easy problem, and when, during the election campaign, the First Secretary of State talked about immediate action, we wondered what the Labour Party were going to do. Of course they have done nothing, because the problem is obviously greater than what they thought it was. There is no doubt that rates represent hardship to many people in this country, in all types of constituencies. There is a mass of evidence on the subject and the Allen Committee's Report said in paragraph 365 that the definition of hardship was rather difficult to determine. It said
1405
that the definition usually rested on such terms as "a reasonable standard of living". I think that in many other contexts we have discovered that it is a difficult term to determine. One cannot say easily in any context what is a reasonable standard of living, and this term fails as such to be a genuine criterion in the Committee's determinations.

The Committee listed the hardship being experienced at this time, and paragraph 361 tells us that rates can represent as much as 8 per cent. of some incomes, and as little as 2 per cent. of others. As has been said several times, this is a highly worrying factor. Paragraph 372 of the Report speaks of considerable under-occupation of property, and in paragraph 375 we are told that, taking all housing costs together, they are generally very high for retired householders.

I was interested in what the Joint Parliamentary Secretary said about our interim relief Measure. This Measure did a lot of good. Many of us could produce examples from our constituencies of relief having been provided under this Act. The Joint Parliamentary Secretary said, with some scorn almost, that only £100,000 had been expended through the medium of this Measure. I would refer again to the Allen Committee's Report, which says in paragraph 376 that about one-third of retired people are in receipt of National Assistance and so are protected against the increase in rates. Thinking of the older people, particularly those assisted by that Act, the Report says:
Only 5 per cent. of the retired householders had an increase in rates which was either greater than 10 per cent. of the excess of resources over allowances or £5 …".
When we realise that this represents only 200,000 retired householders, the figure of £100,000 begins to look much more substantial, and I suggest that our Measure is one which the present Government, facing the fact that there is no immediate answer to the problem of rates, might consider again.

I was a Member of the Standing Committee which considered the 1959 Rating and Valuation Bill. I spent many months in Committee upstairs debating it with the right hon. Member for Hampstead (Mr. Brooke) who was then the Minister in
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charge of the Bill. When we prophesied, with due caution, that the effect of the Bill would be to increase valuations by about 300 per cent. we were ridiculed and told that we were grossly exaggerating, and that if our worst fears—

I have no doubt that the hon. Member for Westhoughton (Mr. J. T. Price) will have an opportunity to make his speech later.

It has also been emphasised this afternoon that there has been a considerable extra rise in rates in those areas of the country which are controlled by Labour local authorities. During the last four years in my local authority, which is probably a very good example, there has been a rise of 58 per cent., and the rate of spending has risen by 61 per cent. per head. Four years ago 34 county boroughs levied a higher rate per head than Newcastle-upon-Tyne. Last year only five did so. This suggests that, like our famous football team, Newcastle United, we have been promoted from 35th in the list of 85, to sixth.

I have said that the cost per head has risen by a rather remarkable amount. There is constant inquiry in my city into the inevitability of such rises. We are asked to make a practical suggestion to deal with the situation. If some suggestions round small ones they can, nevertheless, help, and economies can he made.

Some rises are inevitable. Wages rise. The cost of electricity and gas rises. Under this Government the cost of petrol has increased. There has been an increase in interest rates. The result is that costs rise every day, with a subsequent increase in the cost of living. There was an interesting report some time ago which showed that a work study
1407
in local authority areas had saved the local authorities concerned about £2 million a year. This saving was made by 77 local authorities, at an initiation cost of £700,000. Under the scheme wages go up by £3 to £4 through incentives, and the unions are in favour so long as there is a 33⅓ per cent. bonus for achieving standard performance. Many local authorities may take note of this scheme.

The Labour-controlled local council in Newcastle has an enormous scheme of redevelopment. Such cities as Newcastle-upon-Tyne must be redeveloped. Certainly in an area like the North-East, where new industry is coming in all the time, the natural capital of the area must redevelop its centre. None of us disagrees with that. But the fear that many of us have about redevelopment in Newcastle is that it will get out of step with our means. The Journal, the principal newspaper of the North-East, summarised the position in respect of many citizens when it wrote, some time ago:
Some say that Newcastle's only place in history will be that of the first city which its ratepayers helped to build but which died because no one could afford to live there.
With such sums as £65 million for redevelopment and £25 million for housing, the average person becomes overwhelmed and wonders what it is going to mean to him as an individual.

If the hon. Member is saying that too much has been spent by his city he must point out what services he would cut in order to make the economies that he thinks desirable. Will he indicate what he thinks those services are?

I should be grateful if the hon. Member would follow what I am saying. I was not talking about services. I was talking about the cost of redevelopment, and was about to develop my argument on the subject. Most people accept redevelopment as a necessity, and accept that it will cost them a great deal, but they are asking, quite reasonably, that redevelopment of the centres of cities shall be balanced as between that section which is going to yield revenue and that which has amenity value only.

In my city ratepayers are extremely worried at the moment, to the extent that 2,000 of them held a protest meeting just
1408
two weeks ago threatening to withhold their rates because of the ambitious schemes of the local Labour-controlled council. These ratepayers would be much happier if a little more consideration were given to this all-important point. Let us have redevelopment in balance—development first which will yield revenue, as against that which has amenity value only. We must get the priorities right. That is why the reproductive part of a redevelopment scheme must be the major portion of it and not merely 40 per cent. as in the case of Newcastle's scheme. Ratepayers demand that Newcastle should develop in the proper way, and are very worried when the local Labour leaders talk of building a Venice on the banks of the Tyne.

I can summarise my appeal in a number of ways. First, no one suggests that there is an easy solution. We have never suggested that, and we by no means condemn the Labour Government for realising that there is no easy solution at this stage. Although I have never served on a local authority I have looked at minutes of council meetings for many years, in that my father was an alderman and councillor for 42 years and some of my earliest reading was of such documents as those dealing with rate fixing. I believe that we can have selective rating in cities such as mine, and I stress the problem created by the 5 per cent. of older people, many of whom are living in large, heavily rated houses. It is a small percentage, but a very important, one, which should not be disregarded in our legislation.

No one should think that the business of transferring the burden from local to national level is easy. Nevertheless, as my second point, I say that there is a strong case for the transfer to the Exchequer of some of the costs of education. There is general criticism in the North-East, and probably all over the country, of the fact that the Government failed to take this step when they had the chance to do so in December. Economy in local authority working can and should be examined. The old idea of a local authority having lots of money at its disposal for its various activities has disappeared, as more and more people realise what a high cost is involved in maintaining local services and in urban redevelopment.

1409
There are those to whom the problem of local taxation has been real for a long time and others to whom it is a new problem. I am amazed and almost afraid when I receive constituents who are extremely worried about the high rating which they now face and who tell me, in one way or another, that they have no protection against this. That is quite untrue, so long as we have elected as against appointed councillors—so long as we have local elections. Let us hope that one good result will emerge from the fact that the vast majority of our people are beginning to realise what an enormous burden local taxation represents. Let us hope that the good that will emerge will be that we will no longer have less than 40 per cent. of the electors voting in future local elections.

It is a pleasure to follow the hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott), with whom I frequently disagree but for whom I have, in the short time that I have been in the House, developed a great deal of respect. We get on very well together, sharing the representation of Newcastle with two other hon. Members. I want to refer briefly to what the hon. Member said. Having taken up residence in Newcastle recently, I agree with him that there is an intolerable rate burden, which I have to face, together with other residents.

If, however, we try to arrive at a correlation between the rate increases in various cities, towns and counties and the political character of the councils concerned in recent years, we find that there is precious little. Increases take place regardless of political control. The accusation that Labour-controlled councils in some way or other throw ratepayers' money around indiscriminately is not borne out by the facts. If hon. Members do not believe me they can go away and do their homework, and then come back with contrary figures, if they can obtain them. The general thesis that Labour-controlled councils are irresponsible in spending public money does not hold water.

My only other comment upon what the hon. Member said about the peculiar problems of Newcastle is that, speaking with some diffidence as a relatively new
1410
Member, I wish to give him a small piece of advice. He and the Conservative Party in Newcastle would be well advised to stop playing party politics with the ratepayers and their grievances, and get down to the job of suggesting constructively how they will solve them. That is the purpose of my speech this evening.

I have been highly dissatisfied with the rating system for many years, even before the Conservatives took control in 1951. Irrespective of the party in control, I regard it as a priority measure for any Government to reform the rating system, because it has three major deficiencies. First—and hon. Members on both side of the Committee have referred to this—it is highly regressive in its nature. It takes nearly one-tenth of the disposable household incomes, after tax, of those earning less than £6 a week. Of those households, 85 per cent. consist of retired people living on pensions. It is a regressive tax, and we already have enough regressive taxation with Purchase Tax, and so on.

The second deficiency is that the rate levied is a particular penalty upon the man with a growing family, because it is a tax on house occupation. Statistics show that we still spend a smaller proportion of our national income on housing than does practically any other civilised country. Yet there is a positive disincentive to the family man to improve his housing accommodation and seek better accommodation because, if he took that decision, he would face an increased rent or increased mortgage costs. The increased rate levy is a positive disincentive.

This is a tax on a particular commodity—if hon. Members wish to call it so. It is one of the most rapidly rising forms of taxation. Whatever else we may say, compared with pre-war years, if we take the last few years, we find that rates having increased throughout the country at an average of a little less than 10 per cent. per annum.

The hon. Member has said that rates would tend to discourage people from improving their housing. The figures we have had from the Parliamentary Secretary were that in 1952–53, on average, the rate payment was £17 which would indicate a rateable value of £17 and in 1964–65 the rate payment was
1411
almost double at £32 and this would indicate an equivalent rateable value of £25. There has been a significant increase in the improvement of the housing of the people over those years.

I am not disputing the point about the improvement of housing. I am simply making the point that the taxation of people who improve their housing accommodation is a disincentive in a situation where, in spite of the improvements to which the hon. Gentleman referred, too small a proportion of the national income is spent on housing development.

I was making the point about the increase in levies in taxation by way of rates rising at the rate of 9 per cent. I could draw the attention of my right hon. Friend to the fact that in some parts of Newcastle today ratepayers are paying in rates twice as much as they paid, not 10 years ago, but three years ago. There are ratepayers in my constituency who are this year paying twice as much in rates as they were paying in 1962–63. This is due to the combined effects, first, of property revaluation in 1963 and, secondly, the increased cost of local government services.

I have examined the figures carefully and I find that without any change in the basic policy in relation to local government services, and without any radical reorganisation of local government finances, the rate levy in Newcastle-upon-Tyne will double in the next seven to nine years, and the cost of the redevelopment to which the hon. Member for Newcastle-upon-Tyne, North referred is a special problem. I should be very interested to hear the opinions of my right hon. and hon. Friends about the need for special financial help to local authorities which are in need of reorganisation and re-development, such as the cities and towns in the North-East.

In considering future rate policy, I am cognisant of the fact that education costs will spiral in the future. We are on the eve of what may be the most substantial salary award made to teachers in the history of the profession. I have only recently left the profession myself and I appreciate the arguments the teachers have for a substantial increase. This burden has to be met and I believe—
1412
particularly as the forecast by the Secretary of the Association of Education Committees is that education costs will spiral to about £4,000 million per annum by the end of the century—that this is far too formidable a burden to be placed on the shoulders of ratepayers.

There is considerable feeling on this point in the City of Newcastle-upon-Tyne. Some ratepayers are threatening to withhold the payment of their rates until the last possible moment. I think that hon. Members will agree that this is a misguided approach to the problem. There are constitutional means—as has been indicated in this debate during the last 20 minutes—by which ratepayers may air their grievances.

Turning to the Allen Report, I think that a fact which was widely publicised gave a misleading impression. The fact was correct, but the impression was misleading. The fact was that the proportion of the income spent on rates today is approximately the same as before the war. That point has been widely publicised, but what is ignored is that incomes vary in different parts of the country. There is no doubt that incomes on the North-East Coast have risen less rapidly than in other parts of the country where there has been full employment in relatively recent years.

Secondly, the figures in the Allen Report, which were widely quoted in the Press, are averages. But, of course, there are certain groups of the population whose incomes have been rising much less rapidly than the incomes for the population as a whole. These are the people on relatively fixed incomes. These are the people to whom, quite rightly, the Allen Report drew attention and who are suffering most from the present rate burden. I welcome the consideration which the Government are giving to the whole question.

I wish to say why I believe that hon. Members opposite are wrong in the kind of criticisms that they have been putting forward in the debate. Fundamentally, they are wrong because during their long term of office they rejected the radical solution to the problem. On 18th December, 1963, there was a major debate on this problem, when the hon. Member for Gloucestershire, South (Mr. Corfield)—I do not know whether he is in the Chamber, but I warned him
1413
that I intended to refer to his speech—who was the Joint Parliamentary Secretary to the Ministry of Housing and Local Government, said:
… I am bound to admit that the more I go into these matters the harder I find it to think of something sensible to put in the place of the present system."—[OFFICIAL REPORT, 18th December, 1963; Vol. 686, c. 1363.]
He said later:
All I am doing is to warn the House that there have been many inquiries and suggestions, and none of them has really held up when examined carefully.
I would argue that in many of the suggestions made not only by members of the present Government when in opposition, but in the researches of organisations such as the Royal Institute of Public Administration, feasible alternatives have been put forward, whether or not they were correct and valid alternatives. There is a certain amount of humbug when hon. Members, who supported this approach just over a year ago, come to the Chamber and attack the present Government, who have been in power for only six months, for not having solved the problem overnight.

The previous Government first brought in the block grant system which, in my opinion, did precious little to relieve the problems of the ratepayers. Secondly, they indulged in the revaluation of property. In the debate to which I have referred the hon. Member for Gloucestershire, South also said:
The object of revaluation, or any form of valuation, is purely and simply to find the method by which to decide the shares of the rates.
That is as between different categories of property.

A few moments ago the hon. Member for Newcastle-upon-Tyne, North said that this was a commonsense approach. Let me remind both the hon. Member for Newcastle-upon-Tyne, North and the hon. Member for Gloucestershire, South that in Newcastle, as a result of revaluation, the share of the total rateable value of all the different types of property which fell on householders increased by over 10 per cent., which is one of the biggest increases in any city in this country. It is largely as a result of revaluation, which considerably increased the valuation of property both in my
1414
constituency and in the constituency of the hon. Member for Newcastle-upon-Tyne, North, that the rating problem is so difficult in Newcastle.

While accepting that, would not the hon. Gentleman agree that rating revaluation was essential and had to be done? Would not he further agree that having done it we did the next logical thing and set up a Committee to examine the effect on various sections of the community of the revaluation?

I think it wrong to have brought in revaluation at that time. There was, in fact, a need for a radical reorganisation of local government finance and it was a most inappropriate moment to bring in revaluation. I did not like the idea of revaluation and I am not convinced that the valuation procedure adopted by valuation officers up and down the country is equitable as between districts. I referred to this matter in the House yesterday, and I may return to it again later.

I accept all that the hon. Member says, but one cannot act until one has received the Allen Report. The Report has been in the hands of the Government for only a few weeks and it is wrong for the hon. Member or his hon. Friends to attack the Government for not having taken action on it already.

Finally, I would refer again to the speech of the official spokesman for the Opposition on 18th December, 1963, when they were the Government. He said:
This Bill"—
he was referring to the Rating (Interim Relief) Bill—
does not go to the root of the rating system …"—[OFFICIAL REPORT, 18th December, 1963: Vol. 686, c. 1364–1372.]
Of course it did not, and in 13 years of Conservative government nobody went to the root of what is a radically wrong system of taxation. The opposition to the Government in the Committee this afternoon smacks of hyprocisy and humbug. We have a Government now who will act on the report of the Allen Committee and will get down to the job which should have been done during the last 13 years.

We have had a most interesting speech from
1415
the hon. Member for Newcastle-upon-Tyne, East, (Mr. Rhodes) and I shall certainly not be drawn into the battle between him and my hon. Friend the Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott). I would remind the hon. Gentleman that he accused my hon. Friend—one could say that east accused north—of having criticised the system without suggesting any alternative. But he was rather inclined, although he made a most interesting and enjoyable speech, to do exactly the same himself. We are fully aware of the difficulties, but he is at least on the Government side at present.

I think that the House was bitterly disappointed by the opening speech from the Government Front Bench. I say that for the Parliamentary Secretary to make the accusation that the main reason for choosing this debate on a Supply day was merely the forthcoming local elections, seems to me to be a definite admission that the Government have something to be ashamed of. There is no need at all for these tactics, as the Scottish local election results proved yesterday.

I do not attempt to join in the general criticism of the Government for not taking immediate action over this matter, because it is too complicated, too difficult and too involved a subject to expect action so soon. However, I certainly join in the criticisms over their promises at the General Election that they would do just this, that they would take immediate action. This was in their manifesto and in promises by their shadow Minister of Housing, the right hon. Gentleman who is now Foreign Secretary, who said that action would be taken without delay.

This is one more addition to the list of election promises on which so many people, so many electors, relied, and which were completely dishonoured. What we all know, I am sure, is that, underlying all the speeches which we have had today, underlying the whole problem of the rates is a very real need, after years of debates in the House and Motions on the Order Paper, for a radical reform of the system of rating to bring it up to date and to remove anomalies and hardship. We now have the Allen Committee's Report and that, in my view, confirms that necessity. I suppose that, looking at the other side
1416
of the question as one must in fairness, the main reluctance for radical reform is that there is much in the present system to commend it.

We have not heard much about that this afternoon, but it is true. I suppose that the fact that it is an old and widely accepted system is in its favour, because any grand new idea is bound to be unpopular in some quarters. I do not know how old the present system is, but I think that it is generally accepted that the system started in the Poor Relief Act, 1601, but my constituency of Chichester can go back further. In 1378, a Royal letter was sent to the city ordering the inhabitants of Chichester "to contribute to the cost of repairing the walls according to their ability and possessions." We could take note of that letter now, because this is what we are trying to do, to reform the system so that rates are paid according to the ability of the ratepayers.

Another reason that the present system is satisfactory in some ways is that it is easily and economically administered. Another is that it forms a real and stable form of revenue. One knows approximately how much revenue will come in. It is also not true nor fair to talk of increased hardship in the general sense. If there is such an animal as an average ratepayer—which I suppose is doubtful—the true picture is that, far from being an increased burden, a lower proportion of the earnings of the average ratepayer goes to pay the rates than was the case before the war. It is also true that rates consist of a smaller proportion of the great gross national product and that the rating system takes a lower proportion of the general overall taxation, that is to say, the gross national and local taxation put together. The figures are that, in 1938, the rates amounted to about 17 per cent. of total taxation and last year to about 11 per cent.

It is, therefore, only fair to say that most ratepayers have a smaller burden, proportionately, than before the war. I am very much aware—this is my main reason for joining in the debate—that many older people who have not shared in the general affluence of increased wages and salaries are suffering special
1417
hardship. What is ironic is that this hardship is caused by rate increases imposed over many years for services which bring no benefit to these people.

As someone who also represents a Sussex constituency, may I ask my hon. Friend whether he would not agree with me that many of these elderly people have a particular feeling of grievance, because they have moved from property often too large for them and their pockets to smaller property like bungalows and flats, only to find, having shortly moved to such property, that the rateable value of this property is higher than the larger property which they have vacated? They feel that this is tremendously unjust.

I agree with my hon. Friend, because this has happened. I know the large properties in East Grinstead where all the rich people live. Those people have come to my humble constituency, to the smaller bungalows, and they are suffering because of that move—

With respect to my hon. Friend, they have moved to bungalows in my own constituency. Some may have moved to his constituency, but many people are far from rich in my constituency and I have such examples in many areas in my constituency.

There is no doubt, on this question of hardship, that this is also caused in areas such as the constituencies of my hon. Friend the Member for East Grinstead (Mr. G. Johnson Smith) and myself, where there is such a small amount of industry to take up the increased burden which has been placed upon them under the last Rating and Valuation Act. Of course it is just these areas where these people to whom we are referring retire. They want to get out of the factory areas and they come down to the quieter constituencies such as mine. Unfortunately, they find these very heavy increases in their rates.

There is an urgent need to help the elderly ratepayers throughout the country, and particularly those in areas where, as I know from personal experience
1418
in my constituency, increases have cut savagely into the pockets of those who cannot bear this burden. It is a blot on our society that many people with small pensions or other fixed incomes are suffering hardship from the increased rate burden. The last Government were aware of what those hardships meant because they introduced the Rating (Interim Relief) Act. As its name implies, it was only a stop-gap Measure, but it gave a measure of relief to some in the most need. The last Government also set up the Allen Committee, as a result of which the facts are well known and the stage is set for the necessary reform. It seems to me absurd to say that we must wait for another overall review before we act. The stage is now set for definite action.

A number of overall proposals have been made. The first is that a larger part of the rating bill should be borne by the national Exchequer. This is accepted by most people. The second is that alternative methods of raising local revenue should be found—and this is much more controversial. Thirdly, there is a constant need to prevent waste by local authorities. I think that steps are being taken in this respect by some authorities. On the whole, the criticisms on this subject are probably exaggerated, because local authorities are always a target for armchair critics who are reluctant to give specific examples of which services they would like to see cut to reduce the rates. But some local authorities have gone to the trouble of taking outside professional advice on how to reduce rates and have had surprising success. Too many are perhaps reluctant to take such action.

The first suggestion is that of transferring more expenditure from the local rates to the Exchequer. I agree that we must be careful to preserve local administrative power. It would be a sad day for the country if local services were taken completely out of the hands of local people who have local knowledge. But much can be done. The last Government did quite a bit in this direction by increasing the proportion paid by industry. Not many people realised that this was directly transferring part of the burden to the Exchequer, because industry can set its business expenses against taxation. This
1419
was, therefore, a direct transfer to the Exchequer.

The transfer of the cost of education is often suggested. Robbins suggested that the cost of teacher training colleges should be borne on the national Exchequer. It would be a great relief if all teachers' salaries were borne on the national Exchequer. But we cannot go too far in this direction because we must keep a fair balance between national and local taxation.

The second overall solution—alternative methods of finance—opens up exciting and controversial possibilities, and I will not go into detail about them now. I know that many hon. Members wish to take part in the debate, and we have been asked to keep our speeches short. The most obvious proposal is that of a local income tax or services tax, as I prefer to call it, which would mean that rates were paid by those who could best afford to pay them. There is the possibility of a local entertainments tax or sales tax, or perhaps the introduction of local competitions. There is so much in this exciting field that the Government ought to tell us that they will look at these proposals. I hope that the Minister will tell us that he will do so. So much could be done, and I hope that the Government will not shirk the issue.

The hon. Member speaks of exciting forms in which local taxation could be raised. These were posed in the last Government's White Paper, Cmnd. 209, and the Government rejected them. It is important for him to remember that his party have turned them down.

I see no reason why the present Government should not have a good look at them. The fact that a Conservative Government did not do anything when the situation was somewhat different is no reason for doing nothing now. The situation has become so serious for many people that action must be taken to ensure a more equitable system of rating and, above all, to give relief to those areas in which many elderly people live. We must relieve the hardship of those who are carrying on their own shoulders too much of the rate burden.

I should like to deal, first, with one or
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two points made by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). I was particularly interested this afternoon that he was shedding tears for people who may be driven out of their homes by excessive rates. It is not that such people who are driven out of their homes by excessive rates do not deserve tears shed for them. It is that it is hardly appropriate for that right hon. Gentleman or for his colleagues to be shedding tears for anyone who is driven out of his home.

I should like them to explain how they reconcile the tears of this afternoon with the fundamental philosophy of the Rent Act. Throughout the country they were proclaiming that the purpose of the Rent Act was, through the price mechanism, through the shortage of money of some people, to force people out of homes which, in the opinion of right hon. Gentlemen opposite, were too large for them. During their period of office they showed no particular concern about driving people out of their homes.

The right hon. Gentleman went on to become the champion of the needy. This championship has come rather late. He was better mounted and better clad in his earlier political position to be a champion of the needy, because when he was in the Government he was Minister of Pensions and National Insurance. On the Second Reading of the spurious Bill to introduce the so-called graduated pension scheme of the Conservative Government, he refused to expand the scheme to admit people who were earning £9 a week or less—in other words, the needy, the people for whom the Bill was ostensibly intended. Those were the very people he precluded from its benefits. It does not influence us on this side of the Committee to hear him proclaim himself the champion of the needy now that he suddenly finds himself in opposition.

The right hon. Gentleman put forward a suggestion—although he would not admit that it was a suggestion when he was challenged; at any rate, he mentioned certain words—that we should look at the capital value of houses instead of the rental value of houses. I wonder whether the right hon. Gentleman fully appreciated what he was suggesting. In fact, he has been guilty
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of a major political heresy. He has gone against the political religion of his own party, because in suggesting that we should revert to a capital valuation of houses he is suggesting that we should introduce a small form of wealth tax.

That is exactly what is meant by the capital value of a house. It is the wealth of the person who owns that house. We are in the interesting position of finding right hon. Gentlemen opposite, who for years have argued that a wealth tax is completely unacceptable, now suggesting that it should be looked at. Perhaps we should welcome their support. If we are to consider a wealth tax, why consider the watered-down type suggested by the right hon. Gentleman? Why look at one narrow form of wealth, housing, and not at a full form, since other forms are more easily convertible into cash, anyway?

I have a few suggestions to make, although some of them have already been mentioned. I suggest that the rating system should be maintained for certain non-growth services—and by "non-growth" I mean non-growth cost services, but I will come to that later. There are certain elements within the present rating system which are, as we have seen, escalating the cost of rates. However, other services are more static and a modified form of the rating system, which would involve an outlay to the householder of probably less than half of what he is paying now, would, I suggest, enable local authorities to carry on with a watered-down system and provide the same services. The remaining services would be financed by the central Government.

Along with this, I will suggest how the money might be raised. One possibility has already been mentioned; a rather watered-down form of wealth tax, as mentioned by the right hon. Member for Kingston-upon-Thames. Now let us consider it on a wider scale. A 1 per cent. tax on property over £20,000 would bring in about £250 million a year, or over a quarter of the rate income of this country. There could also be a gambling tax.

Is the hon. Gentleman suggesting that the wealth tax which he is proposing would replace the entire rating system? If so, does he realise that that would involve relieving the
1422
whole of industry and commerce from having any share in the rate burden?

I have not been suggesting that. That suggestion—of a watered-down form of wealth tax—came from the benches opposite, though not from the hon. Gentleman's party. I suggested that certain parts of the rating system should remain, while financial responsibility for the other parts should be imposed on the Central Government.

Having mentioned a wealth tax and the fact that it came from the benches opposite, I now suggest that a gambling tax could be a possibiilty. No one can pretend that in taxing gambling we are taxing a necessity. Money spent in gambling essentially represents surplus spending power. Any balance could then be raised through Income Tax. I appreciate that this would not be particularly popular, but the public and hon. Members must recognise that the money must come from somewhere. We cannot get rid of the rating system without finding the necessary finance.

The objective must be to find it in the fairest way possible; in other words, based on the ability of the individual to pay. Unfortunately, the present rating system does the opposite. It is not related to ability to pay. It is, under the type of house ownership we now have, not a tax on ability to pay, but on indebtedness. It is a tax on the mortgage liability of the people entering into the purchase of houses. Therefore, because they are not able to buy a house we tax them for having a house, so to speak.

This is the ludicrous spiral into which the rating system has taken us. It is a tax on housing and a tax which must inevitably rise for two reasons: first, because the number of houses represents a relatively static base for the tax—we now have just over 14 million rateable dwellings in England and Wales—and, secondly, because even if we fulfil our programme of house building, as we intend to do, the expanding base for the tax is expanding at the rate of only 3 per cent. a year.

We cannot, therefore, afford to meet any extra cost above that 3 per cent. without raising the rates. And obviously, if we are to expand beyond the 3 per cent. figure because of the growth elements,
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the local authorities must meet the additional cost. The most important of these is education and for many local authorities education spending is expanding at the rate of 15 per cent. per annum. We cannot expect to meet expansion of that sort on a taxable base which is expanding at the rate of 3 per cent. per annum without raising the tax itself. It is for this reason that I say that a rise in this form of tax is inevitable if the same services are to be maintained by the local authorities. That is why I suggest that we pass some of this financial responsibility to the central Government.

It may be argued against this suggestion that it would mean robbing the local authorities of some of their independence, but how valid is that argument? We must, first, consider what independence the local authorities have if they are clearly limited by the present shortage of funds. In any case, when we consider education, what independence have they had? While they have been providing much of the funds for education themselves, particularly in the last few years, we heard in the debate on comprehensive education a few weeks ago how the Conservative Government had been overriding the independence of local authorities in respect of the type of education system which they could introduce. Thus, the local authorities were denied a great deal of their independence.

I put this forward as a point for thought and I do not wish to push it too far. However, I suggest that the present division of responsibility between the local authority and the Government is so blurred as to be dangerous to democracy in that to the elector the responsibility for certain services is not absolutely clear. Essentially, representative democracy works on the principle that the elector should know who is responsible. In that way he can make his complaints to the right quarter if the amenities and services which he requires and which should be provided are failing to be provided.

It is for the reasons we have already discussed that there is inevitably a dead hand on some of these essential services. Because councillors must carefully watch the political circumstances which arise every May, and because they must be aware of the political repercussions in
1424
local elections as a result of pushing up the rates, we have had an unnecessary holding back of some essential services, such as education. I suggest that if there were no other major indictment of the rating system, the fact that it has had such a limiting rôle on the development of education alone justifies its amendment.

I hope that the hon. Member for Swansea, West (Mr. Alan Williams) will forgive me if I do not follow his interesting dissertation. He comes from an area which is not intimately connected with mine and I wish to concentrate on the problem in London. However, the rating problem is universal and many of the contributions which have been made in the debate are on common ground.

It is known to many hon. Members that in the last Parliament I was a definite critic of the rating system. I remain a critic of it. While I may have some hard things to say about the present Government's attitude towards the rating problem, I must say, in fairness, that it is a very extensive and difficult one. It will not be solved easily or quickly and it was wrong, therefore, for the party opposite to offer quick relief in its election pledges. It is dangerous to court political popularity by making promises of that sort, as can be seen by the way in which those promises have caught up with hon. Gentlemen opposite. If they suffer in the local elections as a result of having made them, it will be their own fault.

To remind the hon. Gentleman, I will quote, without wearying the Committee with the whole passage, from the Labour Party manifesto, as did my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). The party opposite stated:
… we shall seek to give early relief to ratepayers. …

It might be better if hon. Members were aware of the first part of that sentence, which read:
While the reform of the rates system and investigation of alternative forms of local government finance may take some time to accomplish, we shall seek to give early relief to ratepayers ….

The hon. Member has given me my case. Nevertheless, I do not want to get involved in a polemical argument. Whether the pledges were right or wrong, in my view they were entirely out of order, and the party opposite will suffer as a result.

To get on to perhaps a less political plane, my view is that the present rating system is cock-eyed and topsy-turvy. It is the most out-of-date and archaic in our whole Government machinery. It has been perpetuated for administrative convenience, and because voices are always raised against any effort made to revise it, nothing is done. I believe that rates are loved by local authority bureaucrats and detested by the less affluent members of the community who regard the system as an inaccurate basis and unfair in its general incidence.

The time is overdue for a change. The short, simple answer must be a full-blooded overhaul of the whole rating system. Perhaps one day a political party will have the courage to tackle it. I doubt very much whether it will be the party opposite, but we shall see. My hopes have been dashed today by what we have heard, especially the polemical exercise from the Joint Parliamentary Secretary to the Ministry of Housing and Local Government. At any rate, the points pat forward by Socialists were effectively disposed of by my right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter). It was very disappointing that the Parliamentary Secretary did not reply to two of the most crucial ones. These asked why the early pledge to do something has not yet been fulfilled and why the rates in the Socialist boroughs in the Greater London area have gone up more than they have in the Tory-controlled boroughs, though I give the hon. Gentleman back the example which he quoted to me, when I intervened, of Richmond, where the rates are admittedly high.

Any system which is seen to be bad and unfairly arranged must come into disrepute. The rating system is in disrepute at present and there are many rating anomalies. Firstly, the revaluation of properties has emphasised and not helped the tremendous inequalities. It is ludicrous that there should be a notional letting value, because the value of every house is a matter of opinion even if
1426
dealt with by experts from the Inland Revenue. I have had these experts admit to me in private that they could not possibly go round all the areas which they covered and that they have had to have some rule-of-thumb method. They have admitted to me privately that there must be many inequalities. The result is the number of appeals which have gone forward and which are indicative of the situation. This is a wrong means of assessing houses and it should be changed.

Again, from personal experience, I can say that one can see houses of a similar character in the same road where the rating basis is entirely different. Unless the person concerned knows how to appeal and puts in an application he will go on paying rates unfairly for many years. There is the fantastic situation, which has already been referred to, that if one improves one's premises by adding a garage or making extra accommodation available to take in other people to help solve the housing problem one is penalised and made to pay extra rates. Many people are deterred from taking this action purely because they cannot afford the rate increase.

There is also the point that no account is ever taken in rating of ability to pay. Whether a person is rich or poor, if he lives in a property which is highly rated he has to pay the rates and look pleased. The only possible relief which an individual has is if he is on such a low income that he can go to the National Assistance authorities to help him pay the demand. The Allen Report says that the worst off are the hardest hit. This is the opposite of the principle of taxation where people are graduated according to earnings and the £20,000 a year man pays a high rate of tax, whereas the man who is earning £10 to £15 a week hardly pays any tax at all.

Services are still out of balance. References have been made to education. It takes nearly three-quarters of the local rate product. In addition, a large number of other services which are provided are not used by some people. I know that this is largely a question of choice, but it is particularly hard on the elderly who may not use public libraries, cannot use swimming baths and are too infirm to
1427
go even to the public parks, to find themselves paying for those services which they are unable to enjoy.

The question of London is a vexed one. The increases in rates in London are stunning. The national average has been worked out at 12 per cent. to 14 per cent., which is bad enough, but in London the average is over 20 per cent. There are forecasts that in the course of the next decade there will be an average increase of about 10 per cent. per annum. Many people in London think that these rises are quite disproportionate. They bring about a great deal of hardship.

The Joint Parliamentary Secretary made a very good political speech but he gave a quite inaccurate impression of the situation in London. I grant that changes in local government in Greater London have led to marginally increased rates. This was bound to happen in the early stages because of the taking over of new staffs and the organising of new departments, but I am certain that the fact that so many of the Socialist boroughs have increased their rates to such a large extent is indicative of the attitude of mind of those councillors and gives no hope whatsoever that people who live in those areas will have anything other than further violent increases if they retain Socialist councils.

I find from going round the boroughs and talking to treasurers, as I have done in the last few months, that I can assure the hon. Member that borough treasurers, whether of Labour or Conservative councils, do not deny that the implications of the Greater London Act have made their task much more difficult and more expensive.

They may have made their task marginally more difficult, but in the long term these bigger boroughs could be a step towards greater efficiency. I believe that most of the London boroughs are 25 per cent. overstaffed. This is an indication of the rapacious rate demands which are due. Unless the staffs are cut down, the rate demands will be going up by even more than the average 10 per cent. per annum for the whole country.

I am told that the G.L.C. precept is about 1s. too much. The measures produced by the present Government, such
1428
as the increase in interest rates, the increased duty on petrol and the increase in National Insurance contributions, are said to be equivalent to a 2d. rate in the Greater London area. One has only to have a Socialist council which is "empire building", as some of them are already, and one has an immediate large increase. In my constituency, which is now in the new Greater London borough of Hounslow under Socialist control we have had an increase in rates of 39 per cent., which is one of the highest in the Greater London area, whereas during the previous two or three years a Tory council kept the rates steady with only a very small increase.

If hon. Members will look at this matter carefully they will realise that these Greater London councils must exercise a great deal more economy than they practise at present. There is a cynical disregard on the part of some people in local government—and this can apply not merely to the party opposite but to many others—of the interests of the ordinary ratepayers.

There is a feeling that the money will always roll in, whatever may happen, and that although there may be protest meetings and hostile letters to Members of Parliament, remorselessly the system will roll on, everything will be taken care of and the difficulties can be ridden out. But the breaking time is coming. If the Government are not very careful and if local authorities are not careful, they will have wholesale rebellions on their hands from ratepayers throughout the country.

It is important that we who represent constituencies in the Greater London area should keep a constant eye on the increases which are taking place, and on the empire-building which is going on in some of the Greater London boroughs. Perhaps it is frivolous to mention this, but in some cases already the stipends and allowances for chairmen and mayors have gone up considerably compared with what they were. We know that there are greater responsibilities, but I should have thought that, as a gesture in a year when there have been tremendous rate increases, there could have been some voluntary cutting back to show the electorate that councillors are conscious that this is public money.

It is no use decrying the system and making criticisms without providing, one's
1429
own solutions. Several ideas have been mentioned today. I do not go along with the hon. Member for Swansea, West, in his talk about a wealth tax as a way out of all our troubles. I have studied the matter over several years, as have many of my hon. Friends, and I come down to the idea that we should have a local income tax, one which is based on ability to pay and one which would catch many people who are today either paying only nominally or not really at all. It would bring into ken a large number of children who may be earning quite good money and who live with their parents but who enjoy many of the facilities and services provided by local authorities.

I should like to see a national lottery introduced in the country. We could almost go as far as nationalising the football pools, which would be far more effective than nationalising steel, for example. If we nationalised the football pools and devoted the profits to helping to relieve the rates, it would not solve the problem but it might go some way towards it. As I say, I should like to see the introduction of a lottery, perhaps like the Irish sweepstakes or in some new form. We seem to be the only European country which is not susceptible to these ideas, regarding them always as "not quite nice". But I think that the time has come when we could in that way make a definite contribution towards improving the rating situation generally.

Over all, immediate steps will have to be taken. There must be a transference of education expenditure, or a large proportion of it, to the national Exchequer. There must be a re-examination of alternative means of raising revenue. There must be more economy, and there must be more understanding at the centre by way of grants which are given to local authorities. The Government owe it to the very hard-pressed public to do something now and to honour their pledges. If they do not, in due course they will rue the day.

The hon. Member for Brentford and Chiswick (Mr. Dudley Smith), when he criticises us for our wrongness in not offering quick relief, fails to recognise the wrongness of criticising us for not doing so.
1430
If he will stop his unjustified criticisms, we will come to the point.

The hon. Gentleman suggested that in the new Greater London boroughs—to quote his highly authoritative figures—there is about 25 per cent. overstaffing. Here is the voice of the expert, the man who has served on no fewer than 16 out of the 32 London boroughs and who knows all about their staffing problems. All I can say is that, if we are to listen in this Chamber—sometimes, I fear that we are a little somnolent in our attitude to our fellow speakers—we have the right to expect hon. Members making statements of that outrageous kind to justify them.

Again, the hon. Gentleman said something about the Borough of Hounslow and what happened immediately it became Socialist-controlled. Incidentally, hon. Members opposite seem to imagine that "Socialist" is a term of abuse. I assure them that it is not. The hon. Member said that, when that borough came into being as a Socialist-controlled authority, there was immediately a 39 per cent. increase in rates, whereas, in the paradise of Tory control in his own area before the amalgamation, there had not been any recent significant rate rises.

I can tell the hon. Gentleman why there had not been any significant rate rises. We had the same experience in the Borough of Wandsworth. There were no rate rises because the Tories who were then in control were not only not providing services, but they were busy running down reserves and failing to capitalise a reasonable amount of rates. Of course, they avoided any possibility of increasing the rates. There are all sorts of ways of reducing or avoiding increasing the rates. How right was my hon. Friend the Member for Birmingham, Aston (Mr. Julius Silverman), when he referred to the inhibitory effect of rate rises on the provision of services. How nervous we all are that an increase in rates may bring defeat in its wake.

We know about the burden of rates in London. There can be no Member representing a London constituency who has not, with every justification, had angry letters from constituents complaining of the burden of rates imposed upon them. I remind the Committee that the Parliamentary Labour Party opposed as
1431
vigorously as all our procedure allowed it to do the reorganisation of London government, and we were still defeated, but I make one outstanding concession to the party opposite in that connection. No matter what proposals for the reorganisation of London local government were to be considered, one could say that they would all be wrong. But the one under which we are suffering now is about the "wrongest" of the lot.

London, as I have said before, consists of a series of villages separated by everything except the accident of geography, and to try to organise a system of local government which agglomerates the villages, imposes a castrated regional government over the top of them, and fails to provide them with the necessary resources to deal with the problems which they face is the very negation of good local government.

When the hon. Member for Brentford and Chiswick talks about overstaffing, I can tell him from first-hand experience in the Borough of Wandsworth that the problem in London is not overstaffing. It is the competition for scarce experienced staff who can help to maintain the high level of services which the London County Council set as a laudable standard. One of the factors which is promoting high local authority expenditure in London is precisely the scarcity value of these experienced officers, a scarcity value which has imposed on the new boroughs the need to offer even higher levels of remuneration for these people than they enjoyed under the London or Middlesex County Council rates, and they were pretty generous. This is something within recent experience.

The right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) and the hon. Member for Brentford and Chiswick both made great arm-waving play about differences in rating between Socialist and Tory Councils. I do not believe that they are quite as naive and simple as their speeches suggest. Of course, Labour authorities have always had a higher rate poundage. In earlier days, the Stepney rate used to be something like 23s. in the £. If hon. Members opposite do not know why, I will tell them. First,
1432
Labour authorities have to meet greater needs because the people they represent are depressed in their standards. Second, the quality of their housing is such that it is rated at a low valuation and the product of a 1d. rate is low indeed compared with what it is in Tory-held areas.

The hon. Gentleman should direct his mind to Hounslow, the case I gave. Before the last election in Greater London, two of the three boroughs were Conservative-controlled and they had a very moderate rate indeed.

I can well conceive that, within the great range of rateable values and expenditures, there are many variations, but general reference was made by both the hon. Gentleman and his right hon. Friend to what they described as substantial differences. Stepney, or Tower Hamlets now, needs to provide for a population in far greater need of social services than do Chelsea or Kensington. The product of a 1d. rate in Tower Hamlets is certainly lower than it is in Chelsea. These are simple facts, and anyone who cares to get up in this Chamber and make comments about them at least has a duty to know that much about local government in London or anywhere else.

My hon. Friend the Joint Parliamentary Secretary, in what I regarded as an admirable and trenchant opening statement from this side of the Committee, referred to a number of factors which are promoting an increase in the rates. In addition to some of the factors which he quoted, including the growth of need and the growth of services, there is one which he omitted to mention but which is of the greatest political significance.

During the 13 years of the last Government, there was a clear, insidious, steady handover to rate-funded services of services which had hitherto been Exchequer funded. This was deliberate. There was no suggestion that it was an accident. In a recent speech in this Chamber, I have quoted as one example the clear way in which the responsibility for caring for the mentally sick and mentally subnormal was turned over more and more to local authorities.

The Ministry of Health Annual Reports show that, between 1960 and 1963, the
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proportion of cost of the National Health Service borne by the local authorities rose from 8 to 11½ per cent., an increase of nearly 50 per cent. in the proportion. The actual amount spent by local authorities on local health services under the Ministry of Health rose from about £68 million in 1960 to £123 million in 1963–64. These are extraordinary increases and they were deliberate. They are not the only example.

A little while ago, we had a document from Her Majesty's Stationery Office dealing with Piccadilly Circus. Across the river at County Hall, however, when we were considering the problem of Piccadilly Circus it was put fairly and squarely on the table of London ratepayers. There was never any hint from the Conservative Government that the redevelopment and redesign of Piccadilly Circus would attract the kind of national Exchequer grant which alone could ever make that development possible.

It is all very well for hon. Members opposite to talk about increases in rates or to jeer and chide us for not having done things which we are doing. I must, however, warn them that their opportunities for maneouvring in that way are becoming progressively less and will continue to do so, because we are carrying out our promises and our mandates and within the next three or four years they will find it quite impossible to substantiate the age-old repetition of "You have not done it". I notice already that when we do not do something we are chided but that when we do something, according to what one right hon. Member said yesterday, we are taking the Prime Minister off the hook. All is fair in politics, but I must warn hon. Members opposite that we are doing something about the rates. [HON. MEMBERS: "What?"] I will tell hon. Members opposite what we are doing about the rates. We are proposing to implement a series of suggestions, some of which may come new in this debate today and some of which I am just about to present, although not all of them will be appreciated by hon. Members opposite.

One of the things which we have heard from both sides of the Committee today is a recognition of the need to get away from the present rating system. One thing about which we all seem to be agreed is the historical interest but total irrelevance
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of a system of raising finance on a local basis. I am confident that if we were to relieve local authorites of the responsibility of raising any of their finance, they would heave a great sigh of thankfulness.

I hope that in the course of the next few months, when we have the Government's review of the rating system before us, we shall be given a clear assurance that this point has been sympathetically considered. If we are to get away from the rating system, let us get right away from it. We are half way there already. Half of local government expenditure does not come from locally-raised rates. Why should not 100 per cent. of it come from finance which is raised away from this embarrassment which faces local authorities every time?

There is another point which I wish to put most strongly to my colleagues on the Front Bench. I hope that we shall take a good, long look at municipal trading. It was obstructed all the time when the party opposite were in power. I may say from my experience across the river at County Hall that it was a great shame that whenever the London County Council embarked upon a new scheme of development and endeavoured to do it by direct labour, there was always a howl. We were not able, for instance, to make use of our supply organisation to supply petrol and oil on the sort of trading basis with other authorities which would have saved the country an immense amount of money.

When we wanted to build ambulances at the supply depôt in Wandsworth, we were restricted all the way along by the Conservative opposition. Opportunities for municipal trading of this sort would represent an immediate and immense saving to the rates, which the party opposite claim to be busy seeking. They never did it. I do not know why. Perhaps it was a matter of doctrinaire principle. It is not only that it might have saved the rates. The plain fact is that when one adds it all up, it is a good thing in some ways in the eyes of the Opposition that the rates are made to bear a disproportionate share, because we have heard the drip of the alligator tears on the Floor of the Chamber today. We know that when there is the possibility of putting the burden upon the ratepayer, this is a good idea to hon. Members opposite if
1435
they can save the Exchequer something. That is what the party opposite have been doing all these years.

On the question of building ambulances, I am sure that the former London County Council build some of its own ambulances. The council still has a place on the Morden Road, between Wandsworth and Putney. I know this for a fact, because I supply the council with some raw materials.

I am grateful to the hon. Member for his intervention and I am sure that he is grateful to the former London County Council. I know the truth of what the hon. Member said. I have been to the place.

I said that we have had to fight the Conservative opposition on the London County Council all the way through. That was why the London County Council managed to pursue only a modest measure of municipal trading. It was never able to expand it to the point at which it could save the country and the ratepayer a great deal of money. Ambulance building was one direction in which the L.C.C. managed it despite great opposition. The only reason why the council could manage it was that under the London County Council (General Powers) Act, it did not have to ask the Conservative Government's permission.

One important point which has been touched upon this afternoon is the public relations function concerning rates. I acknowledge that all authorities, whether Socialist or Tory, make this mistake. It is no use printing a complicated list of items on the back of a rate demand to show that the borough is spending, say, 2.1d. on ambulance services, 4.1d. on the police and 3.8 per cent. on old people. All this is meaningless. There is a great need for explanation. As the rate finance system gets more sophisticated and complicated, it is getting beyond the powers even of local boroughs and county councils to understand fully what is involved.

The individual ratepayer has the added incentive not merely of being angry at increased prices, but of not knowing what the money is spent upon. I hope that when the Minister issues
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another circular, he will ask local authorities to bear this in mind. It might go just a little of the way to preventing the rates from being a political weapon. This is, perhaps, their saddest function and I should like to see it done away with.

The hon. Member for Wandsworth, Central (Dr. David Kerr) described the Parliamentary Secretary's opening speech as admirable and trenchant. Mr. Lever, when your predecessor in the Chair, Dr. King, suggested that speeches should be short, he might just as well have saved his breath. Indeed, I have an even better suggestion, and it is that Ministers who have absolutely nothing to say, as the Parliamentary Secretary had nothing to say this afternoon, should not bother to make a speech at all, but should merely circularise a statement to anyone who wishes to speak saying that the Government will listen to the suggestions and that when the Minister winds up the debate he will reply to them. That is virtually all the Parliamentary Secretary said. He said that he was prepared to listen to any suggestions for the reform of the rating system made in the debate and that they would be dealt with in the winding-up speech.

The only other point in the speech of the hon. Member for Wandsworth, Central to which I shall refer is his remarkable proposal that all financial responsibility should be taken away from local authorities and placed on the shoulders of the central Government.

That is why I said that it was a remarkable proposal. One might reverse the well-known dictum and say to him that there should be no representation without taxation. If his proposal were adopted it would mean the end of local government in this country as we know it. There must be some financial responsibility, otherwise there would be no point in having elections such as those in Scotland this week and those which will take place in the rest of the country next week. That is the whole purpose
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for which people are elected to serve on local authorities—to safeguard the money which they raise and which they spend on behalf of the ratepayer.

I take the view—and I start with this proposition—that rates are too high in this country. That is not only my personal opinion or that of the Liberal Party, but, as is obvious from the debate, it is the unanimous opinion of hon. Members, and I make so bold as to say that there is no ratepayer in the country who would not agree with what I have said.

The Allen Committee confirmed a fact about the rating system which we all knew—that only a minority of households suffer hardship as a result of the impact of rates upon them but that among the remainder there is a widespread resentment at being called on for large sums of money once or twice a year. Under the present antiquated system, a system which the hon. Member for Brentford and Chiswick (Mr. Dudley Smith) called "cock-eyed and topsy-turvy"—and I agree with him—rates have risen continually year by year. It is not only the rise in the average rates paid by individual households which we must consider.

These have gone up, as have the rates expressed as a percentage of personal incomes, either before or after taxation. There are variations between one local authority and another, and it may happen to a few fortunate people once in a while that they get a reduction in their rates, but the average shows that there has been a consistent trend upwards.

I have been given some figures by the Rating and Valuation Association which may be of interest to the Committee, because they show the percentage increases in rates from one year to the next, starting in 1959–60 and progressing to 1965–66, the rate demands for which have just gone out. These are the percentage increases which have taken place in those years. I should like the Parliamentary Secretary to pay attention to these, if he would kindly postpone his conversation with his right hon. Friend until a little later. These are the percentage increases from one year to another which have taken place in the rate burden since 1959–60.

In that year the rise over the previous year was no less than 17.2 per cent.
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It is incredible how short our memories are. We are arguing today about a national rise of 13.9 per cent. when only such a short time ago we had an increase of 17.2 per cent. In 1960–61, the increase was 7.3 per cent., as it was in 1961–62; in 1962–63, it was 8.8 per cent.; in 1963–64 it was 10.5 per cent.; in 1964–65, it was 8.0 per cent.; and in 1965–66, the national average is 13.9 per cent.

In the London area—and several hon. Members have referred to this in the course of the debate—every borough has had an increase except Barking. I feel that the remarks which have been made in the course of the debate about the effect of the political complexions of councils upon the rates are irrelevant. The hon. Member for Barking (Mr. Driberg) sits on the Government side of the House. I believe that as many examples could be quoted for the proposition that Socialist councils have had smaller rate increases as have been quoted in the debate to show that Tory councils have smaller rate increases. This is quite irrelevant to the increases in rates which we have had to suffer this year, whether the council is controlled by Socialists or by Tories.

Every borough in the London area, except Barking, has had an increase, and the average is 20 per cent. The largest is Yiewsley and West Drayton which, as the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said, has had a staggering increase of 47 per cent. I do not suppose for one moment that when the ratepayers of Greater London listened to the right hon. Member for Leeds, North-East (Sir K. Joseph) expounding the benefits of the reorganisation of local government in Greater London 18 months ago they imagined that one of the consequences would be that they would be saddled with rate increases 50 per cent. larger than the national average of 13.9 per cent.

The Parliamentary Secretary went through the reasons for this—dislocation, the subsidy to the counties which have been partially curtailed, the break-up of services and the fact that some of the inexperienced authorities which have been created under the London government plan over-estimated the sums of money which they will need. I think that it is more than a coincidence that the
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increase is so much larger than in the rest of the country, and there must be something in what the Parliamentary Secretary says.

But he wrings his hands and says, "You cannot blame this on the Socialist Government, because at the time we were in opposition and we resisted the proposals introduced by the Conservative Government with all the strength at our command". I concede him that much, but he has offered nothing except sympathy to assist the London ratepayer who is facing this substantial increase.

Last year, the national average increase in rates was 8 per cent. and the year before that it was 10.5 per cent. These are very substantial increases.

The hon. Member keeps on talking about the increase in rates. Surely the increase is in the rate-borne expenditure. It would be much better if he would speak of the increase in the rate poundage, in respect of which the figures are very different from those which he is quoting.

Not at all. I am speaking about the sums of money actually demanded from the ratepayers from one year to the next. That is the relevant issue to our debate.

The figures which I have quoted prove that the rates are an ever-increasing burden on the whole community. There is no difference between hon. Members on that statement. Moreover, if one studies the figures in London they show that there are marked and unjustified local variations between one area and another. I agree with the hon. Member for Birmingham, Aston (Mr. Julius Silverman), who said that the present system is quite incompatible with the declared wages and incomes policy of the present Government, under which increases in wages and salaries are supposed to be limited to an annual 3.5 per cent. I do not think that we can expect people to moderate their demands for increases in wages and salaries when they not only look back on the series of substantial rate increases to which I have referred, but also know that unless the system is altered these increases will go on year after year.

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The borough treasurer of the Borough of Bromley, in which my constituency is situated, sent out a leaflet with this year's rate demand in which he asked the question, "Why do rates go up each year?" It was not why they may go up or why they probably will go up, but, "Why do rates go up each year?" He said that local authorities were quite unable to prevent their expenditure from rising however hard they tried. I believe that this is true.

On the other hand, we may doubt that the Borough of Bromley is trying very hard when a proposal is made to spend £3,600 of the ratepayers' money on robes for the councillors and when one member of the council, Alderman Smith, remarked in the chamber that they must wear robes otherwise members of the public might think that they were ordinary people. We might also doubt whether they are looking after our money very well when the council closes meetings of its committees to the press and members of the public.

I believe that there is a justifiable anxiety among ratepayers and that spendthrift attitudes like that on comparatively minor items do not encourage us to believe that the council is able to control many of the most substantial items of its expenditure.

Nevertheless, we agree that there is not very much that the council can do within the framework of the present system, because most of the increases which we have been discussing arise from national wage and salary awards and from increases in the cost of materials and of the goods and services and from national movements of interest rates. What we do say in my party is that the individual ratepayer, and particularly the individual domestic ratepayer is having to foot much too large a share of this burden.

The Committee found, and hon. Members have referred to this, that rates are regressive in character. That is to say that as the income scale goes down they represent a steadily increasing proportion of the householders income. Therefore, the people who are hardest hit by these increases are the retired and people with low earnings and many children. For the two lowest earning groups in the Allen Committee's tabulation the rate burden represented 8.2 per cent. and 6.2 per cent. of disposable income respectively. I think that the Parliamentary Secretary referred to this.

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After nearly seven months of office, while the Government might not have been able to bring forward a Bill we should have at least have known what their policy was for dealing with the situation. The Liberal Party's policy is absolutely clear. It was the only party to emphasise it at the last election. I think. I would like to make six positive suggestions to the Minister—the Parliamentary Secretary asked for suggestions.

First, the Liberal Party says that the Government should immediately introduce legislation to make rates payable on empty houses, flats, offices, shops and factories. This would not only help to reduce the rate levied on occupiers by widening the base, but, also, that it would encourage those who allow the property to remain vacant to bring them into the market either for letting or sale.

May I just get this on record? In fact, the very points which the hon. Member is now making were answered by the hon. Gentleman the Member for Harwich (Mr. Ridsdale), when the entire Liberal Party was absent.

Certainly. I do wish that hon. Members would not keep on interrupting. I had intended to give these figures later, but I will deal with them now. I do not know whether the Parliamentary Secretary, with his great experience of London, has seen a document entitled "Rate Collection Leakages, 1963, 1964" published by the London County Council.

On page 4 of that document the amounts irrecoverable, because the properties were empty, in each of the metropolitan boroughs are tabulated. The total amount which was not collected in the administrative county of London in 1963–64 was £4,500,000. The hon. Gentleman the Member for Birmingham, Aston (Mr. Julius Silverman) referred to this
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and said that in his city the amount had been calculated by the council at £800,000. I would like to tell the Parliamentary Secretary of a result of a calculation I did.

I assumed that the percentage of void properties in England and Wales as a whole was the same as that which obtained in the administrative county of London. I think this is a very modest assumption because where property is of high value, as it is in the County of London, people are unlikely to leave it vacant unless they can possibly help it. Assuming that the percentage was the same, from figures of the total rate collected and produced by the Institute of Municipal Treasurers and Accountants the amount of money lost to local authorities through empty property is no less than £25 million.

This is a very substantial sum which the Government ought to try to collect, or to help the local authorities to collect. I have tried to help them myself. I have introduced a Bill on this subject, called the "Unoccupied Hereditaments Bill", a Bill which has the support of five of the Parliamentary Secretary's hon. Friends.

I gather there is a great shortage of parliamentary draftsmen. I have done the work on this Bill myself. It is all ready and he only needs to tell his Whips not to object to my Bill on Friday. It will then be brought on to the Statute Book by the end of the year and these people could be making some contribution to the rates as soon as the next levy goes out. In the long term, we believe that the rates should be paid on land values rather than on the rents of the buildings which stand on the land.

I agree with all the criticisms that have been made of the present system in that respect. There is no such thing as open market rents and the rents on which rateable values are determined are largely hypothetical. I would point out that by levying rates on site values we would also widen the basis of the rating system still further, by bringing into charge the sites which are not at present being developed.

I am glad that the hon. Gentleman referred to this, because
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I want to tell him the result of the Whitstable survey which an hon. Member has already mentioned. If one assumes that full relief is given to all charities, golf clubs, sports clubs and other open spaces, then the survey carried out by the Rating and Valuation Association at Whitstable shows that the replacement of the existing system by site value rating would reduce the amount required from ordinary householder householders by no less than 25 per cent. If the Government were prepared to act now then the change could be made to coincide with the next provision of the valuation list in 1968 which leaves plenty of time for the preparatory work to be done.

As a golfer, I agree with the hon. Gentleman that it would be a pity to leave levying that extra burden on them. Most of the increases come from sites which are ripe for development, which have planning permission, but which have not been developed. I have a complete tabulation if the hon. Gentleman would like to have a look at it. At the time of the Whitstable survey we did try to persuade the Government that a similar survey should be done in a totally different area. Whitstable is not necessarily typical of the whole country, but at least we have here a survey which has been done by a thoroughly responsible professional association, which shows what the effect might be on the ordinary householder of a complete revision of our rating system.

Would he not agree that a proposal which his predecessor, Lloyd George, brought out in 1909 has been examined by several Royal Commissions, which advised against it? Why has this new Bill come out from the last decade again?

I am sorry to have to tell the hon. Member for Folkestone and Hythe (Mr. Costain) that I did not have the privilege of serving in the House at the same time as Mr. Lloyd George, and
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that I cannot remember what he said in 1909, though I do not think that it is particularly relevant to this debate. I am talking about 1965. I will give this to the hon. Member, that this has been a very long-standing item in Liberal policy, but it is only in the last year that we have had the powerful support of the Whitstable survey.

I think that I have given way enough. We were asked to make short speeches and I still have one or two things more to say.

Before site rating is introduced, there are certain other things which could be done to improve the present system. I quote paragraph 46 of the Allen Report:
Two other characteristics of rates make them more obtrusive, and so more unpopular, than other forms of tax. First, if money incomes are rising and with them consumers' expenditure, the income tax and purchase tax base automatically expands. This gives the central government a great advantage because, without any increase in tax levels, extra revenue will he raised to finance increased expenditure. Local authorities, on the other hand, if they wish to increase expenditure to improve or expand services, or merely to cover rising prices and costs, do not have the same good fortune.
Paragraph 47 says:
Secondly, even though the total purchase and excise taxes paid in a year may be substantial, the amount of tax paid at any one time by consumers … is likely to he very small. It is one thing to pay £36 a year in taxes in amounts of less than 2s. a day, as does someone who smokes ten cigarettes a day, but another to pay it in half-yearly amounts of £18.
Tenants of local authority houses and tenants of some privately rented property already have the privilege of paying their rates in weekly instalments together with the rent. We see no reason why this privilege should not be extended to all tenants of private property and no reason why owner-occupiers should not be allowed to pay rates by monthly instalments as a matter of right, as many local authorities already allow and as the Allen Committee recommends should be permitted by legislation. Legislation on these lines would be universally acceptable and completely uncontroversial and, although it is too late for this year, if the Government were prepared to find time for it, the Bill could be on the Statute Book by the time the next rate demands go out. Everyone would have the right,
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which many already enjoy, to pay rates in small amounts at a time instead of in these enormous bills at one moment in the year.

Another point raised by that quotation from the Allen Report is that a solution would be to allocate a fixed proportion of taxes on income to local authorities in place of the general grant, determining the proportion in such a way as to yield to local authorities the same amount of money as they have received from the general grant in the current year. That would mean that at least one part of their income would rise in step with the general level of the prosperity of the country as a whole. This suggestion would be very much better and much simpler to administer than the suggestion for local income tax which we often hear.

Finally, as over the last few years rates have been rising, as a proportion both of total taxes and taxes on expenditure, we agree that some part of the liability which at present falls on the rates should he transferred to the national Exchequer in order to redress the balance. The suggestion which has met with the greatest approval is that the proportion of teachers' salaries met by the State should be increased. This is the proposal which my party would advocate, particularly in the light of the impending salary increases which I hope the teachers are to get.

The right hon. Member for Kingston-upon-Thames reminded us that this was supposed to be the policy of the present Government, although we heard nothing about it in the Parliamentary Secretary's speech. Another reason for doing this is that it is not likely to lead to extravagance which was one of the arguments of the right hon. Gentleman against transferring more of the burden of rates to the central Exchequer, for the simple reason that for many years to come there will be a severe shortage of teachers so that local authorities will not be encouraged, by being relieved of the financial burden, to employ more of them than they need.

I have briefly outlined the Liberal solution to the rates problem and I should like to emphasise that so far mine is the only party which has put forward any ideas whatsoever. The efforts of the right hon. Member for Kingston-upon-Thames to avoid committing himself to a tax on capital values were absolutely pathetic. It is all very well for the Tories
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to screech and belly-ache about the impact of rates when they have done nothing for 13 years. It is not for them to criticise the rating system when they have opportunities to deal with it. However, the present Government as well understand the art of procrastination under the pretence that nothing can be done until some kind of report, which was commissioned in October, 1963, by the previous Government, has been submitted to them. This is the way they have justified having no policy whatsoever.

With the public outcry against the present rating system getting louder every moment, they bury their heads in departmental sand. Tomorrow, we are to waste the time of the House on a non-issue which is of absolutely no interest to 95 per cent. of the people. The Government ought to drop this old-fashioned, Socialist ball and chain of nationalisation and get on with the jobs which really matter.

I realise that, Mr. Lever. I am just pointing out that we are to waste the time of the House in a debate which could be replaced by a further debate on this vitally important subject of rates. It would be possible for the Government to bring forward legislation implementing many of my suggestions in the time which will be devoted to obsolete Socialist measures of nationalisation. I warn the Government that if they go on refusing to act on this crisis, they will pay the price very much sooner than they think.

I am glad to have the opportunity to comment on the speech of the hon. Member for Orpington (Mr. Lubbock), particularly on the subject of the increased rate at Yiewsley and West Drayton, the 47 per cent. increase which was also mentioned by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), presumably allegedly due to its coming into Socialist control. Yiewsley and West
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Drayton is Socialist anyhow and always has been in my memory, and I have probably known it for longer than either the hon. Gentleman or the right hon. Gentleman.

We might as well get the record straight, because it must be clear if hon. Members are to understand at least some of the idiosyncrasies of the rating system. Yiewsley and West Drayton used to advertise inviting people to come to what was then probably the lowest rated area in London and probably in the country. It was rated so low because it had the vast area of London Airport from which to draw huge sums in rates and for which it was rendering virtually no service. In other words, it had this vast area of the aerodrome with a high rateable income, which was a bonanza for the local ratepayers who were getting all the advantages of this very high rateable value coming to an area where demand was relatively low because the area is small. Consequently, when it became the new London Borough of Hillingdon, the rating impact was enormous. That might as well be understood so that it is clear that the rate increase was not due to any wicked machinations on the part of the Borough of Hillingdon.

On the other hand, the right hon. Member for Kingston-upon-Thames was preening himself about the position in his own Borough of Kingston-upon-Thames where he said that there had been a rate increase of only 7 per cent. Before that, Kingston happened to be a very affluent part of the County of Surrey. Therefore, it would be contributing something towards the general social services of Surrey, such as education, welfare and various other things. It is no longer required to contribute in that way. It is contributing to a very much smaller and more affluent entity. Consequently, it is not a question of the size of expenditure. It is just an act of God or grace that it is in that particularly affluent position and is able to manage with a smaller percentage rate increase than other places. There is nothing clever about it. It would have happened whether there had been a Conservative or a Socialist council.

In addition, it adds insult to injury by collecting very large sums in rates from the rest of Surrey because County Hall happens to be situated in the
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Borough of Kingston, and this is additional grist to its mill. The right hon. Gentleman should come off this sort of thing, both with regard to Yiewsley and West Drayton and with regard to Kingston-upon-Thames. It is as well to have the record straight about the facts in both cases.

Reference was made to the General Grant Order. It was said how simple it would be merely to add a few extra million pounds to the Order. When the Labour Party came to office, it was faced with this position. The Conservative Government had taken a decision which meant that there would be a very considerable reduction in grant in the second year of the grant period. I am grateful to my right hon. Friend for restoring in the second year £20 million worth of expenditure to rank for grant which it had previously been decided would be lopped off. Therefore, it is as well that we should look at what the previous Government's intentions were about the general grant. There is no question that they would have increased it. Certainly they would have been very tough and very tight. I am glad that we have had the change.

Merely to increase the general grant does not deal with the general complaint about hardship in paying rates which we all appreciate and know exists. Some hon. Members opposite admit that the incidence of rates does not create hardship to many people. Increasing rate demands are an irritation, not necessarily a hardship in the ability to pay, for a large number of people. But for a considerable proportion of the population who are on fixed incomes—pensioners and people of that kind—it is a hardship as distinct from an irritation.

I accept the view put forward by the hon. Member for Orpington that it would be highly desirable to make the system for the payment of rates much more flexible. When people in pre-war days, and perhaps pre-1914 days, paid their rates with their rent, it had this disadvantage. Often they did not know how much they were paying in rates and therefore they were not so much interested in the problem of rates. But equally they were not regarded as a particularly heavy burden. Now they are regarded as a heavy burden because they are paid in a lump sum. They are due and payable
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on demand. If a person does not pay them within seven days, he is liable to prosecution. At the end of seven days, any local authority can issue a summons and the magistrate has no alternative but to make the necessary order for the money to be paid.

This is a matter which should he dealt with very quickly. Local authorities should have arrangements whereby people can pay perhaps not weekly but certainly monthly. I know that the argument is that often very big ratepayers pay when the rate demand is issued and that this is valuable from the point of view of local authority finances because it brings money into the pool before the general rates come in to keep the services going and has an important effect from the point of view of keeping local authorities out of the hands of banks concerning overdrafts. Few authorities want to finance their operations by means of overdrafts or to go into the short-term money market, because both methods are now very expensive.

Incidentally, while I am on the question of expense, it is as well that we should realise why local authorities find themselves in financial difficulties. They are due to the policy of the Conservative Party which forced local authorities into the money market whereas previously they had been in the habit of going to the Public Works Loan Board for their capital moneys. This has led to interest payment difficulties. The Conservative Party cannot stand in a white sheet on this matter because of the increased costs to the ratepayer as a result of increased interest charges. Right hon. and hon. Members opposite are directly responsible for many of the troubles from which local authorities are suffering.

I return to the question of the rate demand. I ask the Minister seriously to consider this matter. An alteration of the law would be involved, because at the moment the rates are due on demand. It would be much more desirable if people knew that they had the right to pay their rates by monthly instalments and if local authorities were able to make reasonably adequate provision for people to do that. I hope that that point will be seriously considered.

Questions have been raised about the method of assessment. There is no per-
1450
fect method of assessment. The system of collecting money on the basis of the sort of property which a person occupies and which bears no relation to his ability to pay is archaic. The person with a large family who has many commitments and must of necessity have larger premises is obliged to pay much more than the person who lives in small premises and has virtually no commitments. When the rating system was instituted, in 1601, I think, property was the main criterion of wealth. Therefore, it was an easy way of establishing how much a person should pay. The only reason why local authorities and their advisers want to continue the rating system is that they cannot think of a more convenient way of getting the money for local purposes.

Originally the idea of local payments was to maintain the local poor. The system changed from the parish to the board of guardians, from the board of guardians to the counties and from the counties to the Government. There has been a change from a purely local system to a national charge. I do not advocate that this is a pattern for all sorts of services. I do not think that it is. But we want to get away from the idea which was the basis of the system that the locality paid for the services which it enjoyed and wanted, because so many services now are not of a local character but of a national character, even if they are locally administered. A considerable readjustment of the basis on which local rates are levied is required.

We think no longer in terms of the local authority just levying a rate for its roads, or something like that. It has to levy rates for all sorts of purposes dictated by the Government. It is recognised that the Government contribute about 50 per cent. of the costs of some services. This ought to be considerably increased in respect of some services because of the additional demands which the Government make on local authorities in the provision of services. There is, therefore, room for a radical readjustment of the relationship between central Government and local government.

My own association, the County Councils' Association, has given considerable thought to this matter. With expert advice, it came to the conclusion that
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at this juncture there was not a satisfactory alternative to the rating system, but that there should be considerably increased assistance given to local authorities by the Exchequer. Weighting to deal with hardship is one of the important things which fall to be considered.

I do not accept the idea of special relief being given to certain areas. The area which has been quoted very much is Bournemouth. There are some very wealthy people who live in Bournemouth. Not all the people who retire there are poor. Many of my constituents cannot afford to retire to Bournemouth. Therefore, they suffer in their retirement the same hardship in the area which I represent. To try to relieve hardship by giving special relief in certain areas is not the method to deal with the problem.

Hardship can be dealt with in two ways. It must be relieved if the rating system is to remain as it is. What is needed is some machinery which is fairly simple and which does not smack of a means test—although, in effect, there would have to be a means test—by which people could fairly readily obtain relief from the payment of rates which they cannot afford.

We recognise that many people object because they say that they have to pay for services which they do not need—the childless couple, for example, who pay rates on their property, because part of the money must go towards educating other people's children. The argument is sometimes used why they should be required to do this. The answer is that we are moving away, as we have been doing a long time, from the former pattern. It is no longer a question of the individual paying for the individual services which he received, which was the original basis of rates. It is now a question of contributing towards the general social services.

In this context, we require the Government to look at this problem, including the question of the social services, the size of the social services, the proportion which can be borne in a locality or nationally, and the adjustment as between one locality and another with regard to the general level of ability to pay. Different results will be obtained from different areas. For example, the areas
1452
which are sometimes called the stockbroker belts find no difficulty in paying their rates. Incidentally, they happen to be the areas where the social service demands happen to be least. Consequently, the demand from them, proportionately and actually, is far less than in an area which has a high percentage of elderly retired people and people who are much poorer than those who inhabit the stockbroker class of property.

No matter how much we increase the assessment on the desirable properties in those areas, we still would not make any particular adjustment with regard to a balance of ability to pay as between those areas and the poorer areas, to which reference has been made in earlier speeches, such as Stepney and places which before the war had very high rates.

There can be no short-term answer to the problem. If the Government review of these matters is sufficiently far-reaching to readjust the balance, not only between the Exchequer and the local authority, but on the basis of more equitable provision for ability to pay, either by the relief of hardship or by an alternative means of rating, we would begin to get somewhere towards avoiding that difficulty.

In the short term, however, we need immediately some means by which some people can pay their rates much more easily and frequently than at present. We also need to remember that as the services expand, as they are bound to do with the increasing population, which is increasing far more rapidly than was anticipated a couple of years ago, there are bound to be ever-increasing demands upon local authorities to increase the social services. It is no longer a question of local social services but a question of a local contribution towards what is nationally required.

The speech of the hon. Member for Southall (Mr. Pargiter) illustrates the difficulty of hon. Members taking part in this little debate in wanting to get rid of the rating system. Many suggestions have been made for mitigating it and for readjusting the balance as between the locality and the centre, but apart from local income tax and taxation of site values, both of which are fraught with
1453
difficulty, no radical solution has today been put forward for the abolition of the rating system.

I therefore conclude that, however radical the Government feel that their approach should be, there will not be a great change in the fundamental system of local taxation by rates, whatever adjustments may be made between the centre and the localities.

It is not right to have it on the record that no fundamental change has been suggested by the Government. A real threat in no uncertain terms was directed at agricultural premises by the Joint Parliamentary Secretary.

Not only during and since the election period, but throughout the whole of last year, a great deal of public comment was made about private splendour and public squalor. For many ratepayers, however, the reverse has proved to be true. If my calculations are correct, during the last seven years the rate total has doubled from £522,000 million to £1,100 million a year.

I have a good deal of sympathy with the correspondent to a newspaper who wrote the other day:
I am trying to stop my family leaving a 40-watt bulb burning in the bathroom all night while outside my house is an unwanted 400-watt bulb burning all night in an unnecessary place.
He said that this was an instance of public splendour and private squalor. There is a certain amount of truth in that in the minds of the poorer ratepayers.

My experience at the General Election was that a large number of constituents were calling for increased expenditure locally on education, schools, nursery schools, more houses, hospitals, clinics, universities, larger grants to universities, more roads, better lighting, more swimming pools, libraries and the rest. I totted up these demands that were made in my constituency during the election and I found that they would entail an extra expenditure of £500 million a year by the nation through rate expenditure.

At election time, democracy wants these things, but when the rate demands come in April, are people willing to
1454
pay? Already, the Government have imposed upon us increased national taxation of about £500 million a year. In my constituency of Twickenham, which has been very well managed over past years, the rate has gone up by no less than 34 per cent., from 8s. 2d. to 11s. in the £, comparing with a London increase of 20 per cent. This is the extraordinary position that affects my constituency, where there is not much industry but a large number of middle-class people and not, perhaps, as many children as in other parts of London.

Our locally-controlled services cost, I am told, £6.3 million a year, of which education accounts for slightly over 50 per cent. at £3.7 million. A Greater London Council precept of £1.4 million puts up the total to £7.7 million. Towards that, we get a Government grant of only £1.8 million.

The national average for the general grant as compared with local expenditure is, I am informed, 55.1 per cent. In Richmond-on-Thames, however, with Government grant of £1.8 million towards locally-controlled services amounting to £6.3 million, the percentage of Government grant for local expenditure is 28.5, compared with 55.1 for the nation as a whole. This results from the operation of the formula. There must he something radically wrong with the formula and I ask the Government to examine it again.

We happen, for instance, to have 109 children per 1,000 persons, but Havering, which is just at the other end of the North Circular Road, and is about the same size as Richmond-on-Thames, has over 110 children per 1,000 of the population and gets, I believe, an excess grant of £1.5 million. Enfield get £3 million. I suggest, therefore, that in the London area we should look at the formula again to see whether it is working out correctly.

Some people blame the reorganisation of London government, but since I have been a Member of the House of Commons I have always had demands put upon me, not only by local councillors, but by ratepayers, too, asking why Twickenham, which is the same size as Oxford, should not have powers in respect of education, health, welfare and all the rest. That was what led me
1455
to support the Government over the reorganisation of London government, because I thought we should have those powers. Indeed, the Herbert Commission, which was appointed as long ago as 1957, came down unanimously in favour of giving London boroughs the full powers such as any county boroughs have.

One tries to analyse why there is this increase in the rates. There is an increase in the police rate; there is provision for teachers' salaries; the rise in the cost of National Insurance contributions; petrol tax, increased in the autumn Budget; an increase in interest rates—all brought about by Government action. There is the rising cost of salaries and wages generally.

Then we have, as I am sure many other parts of the country have, very splendid provision for the young people. We have our college of technology, which costs £350,000 a year to maintain. If it were a college of advanced technology, we would not have to pay that. Then ours is an area where we have the managerial class who have many clever sons and daughters, so we have a high percentage of university students. I am told that university grants cost us £350,000 a year. That is an item which might be taken into account in the formula for the grant.

The Allen Committee, as many people have stated, talked of hardship to retired people of whom 40 per cent. pay more than a quarter of their income in housing costs, and five per cent. of them pay more than half their income on housing costs. One thing in the Report which I think Londoners ought to notice is that Londoners seem to have fared worse than the people of any other part of the country. In London, there has been an increase in rateable value of 3.1 times, compared with an average of 2.7 for the rest of the country. As the Allen Report says in paragraph 353, London is an area where there are many allegations of hardship. For instance, there are bungalows on which £8 more a year on average are paid, and of those 10 per cent. paid £20 or more.

Therefore, I think that there is possibly a special case for Londoners for a special rate, and particularly for the
1456
retired heads of households. Let us look at the needs of people, mentioned in the Allen Report, with incomes of up to £512 a year and see what we can do to help them. The rates of many of them have doubled in the last 10 years, and I should like the Minister to take up that point. The Rating (Interim Relief) Act gave a little help. I know that it has been criticised today, and I am not saying that it went far enough, but it gave some help, an average of £42,700 a year for my local authority.

I have had many letters from retired people, and I received one only this morning which said:
We who have borne the burden and heat of the day are most affected. We are not in a position of the rabble rousers in Trafalgar Square with banners and slogans. In my own case the rate was nearly trebled from £54 to £150, and I have now received a demand for £41 5s. for the half-yearly instalment.
It is a quite heavy sum for a retired civil servant.

These people are, of course, remembering what was promised at the election, and I am now going to refer to the man who, I think, had at the election most responsibility for this, who was then the "Shadow" Minister of Housing and Local Government. Of course, the present Minister did not know at that time that he would be the Minister. On 27th August, in Birmingham—all these things seem to be vouchsafed to the citizens of Birmingham—the right hon. Gentleman the Member for Fulham (Mr. M. Stewart) said:
The Labour Government will undertake such a review but will in any case begin to tackle the problem without delay by revising the system of grants from the Exchequer to local authorities. In particular there will be a substantial grant for education and a larger proportion of the total cost of local services must be borne by Exchequer grants.
Well, that is a very good sentiment which I pass on to the present Minister, but no wonder the right hon. Gentleman the Member for Fulham has been transferred to the Foreign Office, because, obviously, with that undertaking round his neck, he could not have been Minister of Housing and Local Government: it would have been too dangerous for him.

So I ask: when is this rate relief coming? It is the short-term relief I am speaking. I am not at the moment
1457
interested in the long-term review. Looking again at that unhappy page, page 13, of the New Britain manifesto, which has deceived so many electors, and which has been quoted so many times, I ask the Government what they are going to do. I remember, too, that the Minister of Housing and Local Government went up to Huyton to make a speech on 26th February. I suppose he was particularly anxious that day to please the boss. He brought forward a lot of ideas, such as local income tax, a second local tax, and a tax on site values. He went to Galashiels a few days later and knocked the whole lot down again.

Still, something has got to be done—about education, for instance. In my own borough we spend no less than £2.3 million out of £3.7 million on education, two-thirds on teachers' salaries. Why not take some of this away from the locality and put it on the central Exchequer, or, alternatively, increase the grant from 55 per cent. to 66⅔ per cent., or something of that order?

On behalf of many retired people in my constituency, of many hard-working middle-class people who must still live in the London area, I say that something must be done to relieve them of this burden. The old and retired people are asking what is to be done, and on their behalf I ask the Minister, when he winds up the debate, to tell us what he intends to do.

I think that the basis of the charge made by the Opposition this afternoon can be divided into two parts. One is that the Government have failed to act early, as forecast in the election. The second is that we need to take a long look at the present system of local government finance and decide what changes should be made.

As to the Government's having failed to help the ratepayers immediately, it must be borne in mind that the General Grant Order was made on 15th December, when the Minister had been in office about seven weeks. It seems, therefore, quite likely that as soon as the Minister put his nose through the door of the Ministry the first thing the civil servants said was. "You have to decide the grant to local authorities, because they have to make up their budgets and estimates for
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the coming year." Therefore, it seems quite clear that the Minister was forced to accept the grant which was anticipated by the previous Administration, and which hon. Members opposite are now criticising because we have had to endorse it at very short notice.

Anyone who has any knowledge of local government finance will realise that it was quite impossible for the Minister to come to a new decision on this very quickly—to have taken account of local authority estimates, and so on, to have taken into account all the present difficulties, and then to have reviewed the whole matter, all before coming to a decision. Thus, I would suggest that the matter would not have been decided even by now, and yet from 1st April this year we have had new rates coming into being. It is quite clear that the Minister was forced to accept the recommendations of the previous Administration, and hon. Members opposite now have the audacity to come here and criticise us for not being more generous.

The hon. Member has made a statement which is rather more frightening that the speech of the Joint Parliamentary Secretary. The hon. Gentleman has suggested that the Minister has not the final power, but is the complete prisoner of his civil servants and has to accept exactly what they say with. out paying any regard at all to such suggestions as that made by the right hon. Gentleman the Member for Fulham (Mr. M. Stewart) that State grants would be increased. I should like to feel that the Minister is in charge, not the civil servants, admirable though some of our civil servants are.

I am making no allegations of that sort. What I said was that if the Minister wanted to review the position to take into account the present difficulties, and so on, the time taken to make a decision about the grants payable to local authorities would have meant that local councils would not have had time to deal with their rate assessments. This matter was urgent when my right hon. Friend took office, and that is why he has not been able to do this. It would have been necessary to have regard to weighting, to the grant formula, and so on, laid down in the 1958 Local Government Act which brought in the
1459
block grant as a substitute for the previous percentage grant.

Secondly, we have to take a cool, long look at the rating system. Many suggestions have been made today by hon. Members on both sides of the House. Some of those suggestions need a great deal of attention and should be considered seriously, but local government finance has its problems which go back to the Poor Law Relief Act of 1601. The present system has been in force for about 360 years. It is, therefore, obvious that we cannot make any changes overnight, when for all that time it was accepted that the rating system was the best method of carrying on our local government services.

There is no doubt, however, that a change is long overdue. Local Government is very complex in its financial system, but to some extent it is as easy as A B C. Local government finance is making aldermen adamant, burgesses belligerent, councillors clamorous, ratepayers revolt, and Members of Parliament militant, for a change.

Local government finance is extremely complex, and those of us who entertain local government people from abroad, such as burgomasters from Germany and other places, and who have to explain how our local government finance works, know how difficult it is to do this. We have to tell them that we have a rating system dating back 360 years. We have to explain our system of block grants, percentage grants, rate deficiency grants, and equalisation grants. We have to explain how the weighting depends on the number of children, the number of old people, the number of miles of country roads, and so on, in the area.

The present rating system is archaic, outworn, ineffective, primitive, mediaeval and repressive. I could find a few more adjectives to describe it. Therefore, it needs changing. We appreciate the limitations of the present system. First, of course, it is not based on the ability to pay. It depends on the size of the house in which a person lives. If a man has a number of children, and needs a bigger house, he pays more rates than the banker or company director who lives with his wife in a small house. The system is not based on ability to pay. Many hon.
1460
Members have said that rates are too high. It is not merely that. The point is that rates are a means of paying for local government services. They are unfairly placed on ratepayers, and the method of payment is all wrong, whereby people have to pay a lump sum all at one time.

It seems to me that the present rating system leads to a deterioration of property. The more a man improves his property, the more rates he pays. If he allows his property to deteriorate and become a slum, it is possible that his rates will go down.

I propose now to refer briefly to a speech by David Lloyd George, 52 years ago, to show that nothing has been done in the meantime. He said then:
The worst of the present rating system is that the moment a man neglects his property, he escapes his rates; the moment a man begins to improve his property he is fined as a ratepayer.
He went on to say:
But somebody meets him"—
that is the rate assessor—
in the street and says, 'Have you heard that Mr. Brown has added a bathroom to his house?' He says, 'I don't believe it: I will go there at once'. He goes and says, 'Is this true what I hear about you, that you have put a new bathroom in your house?' Mr. Brown says, 'I am sorry', and the official replies, '£2 added to your assessment, Sir'. And he walks home past a slum district and he says, No baths here, anyway'. He meets the proprietor. … He says, 'No improvements about my property; it is not worth as much as it was two years ago'. He takes him by the hand and says, Well done, thou good and faithful servant; go and write quickly thy assessment down by 15 per cent.'.
David Lloyd George said that in 1913, and a similar situation applies today. If a person improves his property by adding a bedroom, by putting in a bath, by putting in central heating, or by improving it in some such way, he runs the risk of being penalised for having done so. This is one of the basic objections to the present rating system.

If we want to review the system, to see whether any patching should be done to the outworn garment of local government finance, one has to look at the past and see how it was evolved, because 360 years ago the system started as a means of paying for the poor. Even in those days the threat of a charge on the rates aroused as much fear in people as a threat of a charge by the Light
1461
Brigade. For all those years it was quite clear that one had only to say that the rates would go up if something happened in the local council, and everyone said, "We must keep down the rates at all costs".

The cost is the present situation in our country, represented by primitive homes, millions of slum houses, and sub-standard houses. It is to be seen also in the schools mentioned in the Report issued a few months ago, which pointed out that many schools were built before 1875 and lacked sanitation, drainage and other facilities, and this applies not only in the countryside, but in the towns.

The present rating system, far more than any other factor, has been responsible for a lack of progress in local government services. Therefore, we have to make changes to make progress. One can say that over the years the system has served us fairly well, and that that proves that the system should continue, but it has served us well only because of the deviations from the original system. At one time we had a rating system where we assessed not only a man's property, but his income as well. In mediaeval times a man paid rates on the number of cattle that he had, on his land, and on his property. The amount that he paid to local government services was indicative of his wealth as well as his income.

Since then, it has been changed to a property tax, because over the years Parliament has allowed certain exceptions to come into being. We had the derating of agricultural land. We had the derating of canals, tithes, and other factors. In 1929, we had the derating of industry, whereby industry was relieved of 75 per cent. of its rates. This put a bigger burden on the rest of the community, and so we had to find more exceptions to the outworn garment to make it tolerable at all.

There have been further changes since the war. In recent years we had the de-rating of commercial properties, which meant that they were relieved of 20 per cent. of their rates. The most recent change of any great dimension was made in 1958, when the block grant was introduced to replace the percentage grant. I remember being at a conference of the
1462
Institute of Municipal Treasurers and Accountants in Edinburgh, in 1958, when the then Minister of Housing and Local Government told us about his new idea, which was that local authorities should be freed from the dictates of Whitehall and that they should get block grants and spend their money as they wished without any control whatsoever.

The Minister was so bold as to suggest that this was a good thing, because those good authorities who spent less than they did before would save money under the block grant and would lower the rate, whereas the bad boys of local government who wanted to spend more money on social services would have to answer for it to the local ratepayers.

Everyone knew at the time that that was a dodge on the part of the Minister because he wanted to limit liability on the Exchequer and to pass the burden of growing services on to the local authorities. I allege that if the system which prevailed up to 1958—the percentage grant system—had been carried on we should not now have this burden on the ratepayers. It was obvious, especially in respect of education, that local authorities were being forced to pay more and more for essential services. We talk about the 1958 Act giving freedom to local authorities in spending as they think fit the money they receive from the Exchequer. If they spend less they can lower their rates.

It is obvious that they do not have the freedom which should have gone with that Act, because the Act on no less than 45 occasions says that the Minister has the last word in respect of the work done by local authorities, and in respect of the way they spend their money. It says the Minister may override them, overrule them, and amend and alter all the plans and policies of local authorities if he does not think that their services are being maintained at proper standards.

I do not object to that, because there are backward authorities which are not providing the proper standard of services, while others who do provide a good standard have to levy higher rates. Some hon. Members opposite who have been active in local government, and some local government people who are known as Independents, in many places, or Conservatives in others, have always taken
1463
a bleak view of local government. They did not want local government to have any great effect upon their local communities. In this sense the rating system has been a great ally, because as soon as the ratepayers began to ask for better houses, educational services, and so on, they were warned that if they had them the rates would rise, and so they went away with fear in their hearts that the rates would go up. That made them ready to tolerate slums, bad schools and the lack of amenities for much longer.

We still have them today. The progressive authorities who want to get on with the work of making up for the wasted years and who want to sweep the cobwebs from the council chambers, have to put up their rates, and have been accused of increasing their rates as soon as they have been elected. We must, therefore, have some regard to alternatives. Many alternatives have been put forward, and I suggest that the Minister should consider them seriously, no matter from which side of the House they come.

One alternative which should be examined is that of local income tax. I have already mentioned some of the worst aspects of the present rating system, and I believe that local income tax is a possible alternative. There have been several reviews of this over the years. In 1896 and 1910 Royal Commissions examined the question. The situation has improved today, because we now have Pay As You Earn, and it would be possible, by levying a local income tax based upon local needs, to connect it with national Income Tax and to pay the money back to local authorities for local administration.

If we have an alternative it is important to make it local, so that local councils are answerable to the ratepayers for the money they spend. This would be quite possible by the alternative method that I have suggested, and it would also mean that many people who do not pay rates nowadays would be brought into the fold. Many teenagers, whose total spending power is about £3 million a day, do not pay rates. When rates rise the main burden falls upon the householder—probably the father of a family, who may be earning £14, £16 or £18 a week and who grumbles when the rates rise, while children who may be earning good money, and who are unmarried, with no real
1464
commitments, do not have to pay anything at all for these services.

Education is a costly service, but we pay for it willingly. There is no reason why those who received benefit from education recently should not, when they start earning, have the chance to pay proportionately towards the service. This would relieve some of the pressures upon the householder who has to bear the burden at present.

Does the hon. Member suggest assessing local income tax according to where the person works or where he lives? If he works in a different place, how does the hon. Member suggest that the payment is brought back to the place where he lives?

That is one of the questions to be answered. One can have a person with two homes, but if we were taxed according to where we lived it would be a good thing.

Under the present rating system we have illogical local government boundaries, due to the fact that local authorities who want to provide services must have the means of obtaining the income. I suggest that a local income tax would not only ensure independence to local authorities but would also be easy to collect, through P.A.Y.E. As I have said, we could bring teenagers into the net, besides others who have the means to pay but do not contribute directly. We should also ensure that local authorities were answerable to the ratepayers.

Many other alternatives might be considered. I suggest that the time is long overdue when the tattered garment of local authority finance—patched up with all the derating of the past, the interim rating relief Acts which have recently been brought in and all the illogical situations in local government finance—should be reviewed, and a real alternative put forward.

The present system of local government finance is overrated and is due for review on that ground alone. I suggest that although we claim that rates are too high, that is not our real objection, because, in many cases, we should be paying more money for local government services, having regard to the work that is to be done. If we were to make a real effort to make sure that people paid according
1465
to their ability, and that the method of payment was eased by monthly or weekly instalments being made possible, there would not be objections, and we should be able to make progress in local government, in which there is so much to be done. Whether we represent constituencies in the countryside or in towns we have many objections year by year from people who suffer under the injustice of the present system. In my county, Nottinghamshire, the county treasurer and the chairman of the finance committee have said that rates will be increasing year by year. In Newark, in my area, the same position prevails. The only hope for the future is to throw away the garment of the past, which is unfitted for modern needs, arid to take a new look at the matter in order to see whether local income tax is not a better alternative.

There were a few sentences early on in the hon. Member's speech on which I wanted to comment, but they passed from my mind in the course of the hon. Member's subsequent lecture on the general rating problem. We all have constituents who are worried not about long-term theoretical discussions so much as about what this Government or that Government may do in the next five, 10 or 15 years. They are worried about finding the money to pay the rates this year. Lest I be accused of making a party political point, let me hasten to add that they were also worried about how they were going to find the money to pay the rates last year. These esoteric discussions about what should be done for the future do not carry us very much further with the problem.

It seems to me that the Government's answer to the problem can be divided into two. First, they put forward the usual excuse, "How can you blame us? Look at the legacy you left behind you." Hon. Members opposite have said that the Tory counter-argument was that the Labour Party does not carry out its pledges, and that this argument will soon fade away. I do not think that it will; it will grow. Anyhow, only time will show.

One argument that will fade away is the Labour whine about the legacy that we left behind. It is now nearly seven months since the Labour Government came into office. How many more months
1466
will Ministers go on blaming everything that happens on the previous Government? There must be a time limit, even in their minds. Perhaps tonight we shall be told whether it will be in another nine, 10, 12 or 15 months that they will finally take responsibility for their own policies, or lack of them. This is becoming a little tiring.

The second thing which has happened is that hon. Members opposite have put up their own "Aunt Sallies" and said that we are criticising the Labour Government for not honouring long-term pledges. We are not doing that. That is not what is of pressing importance at the moment. No sensible person would believe that the consequences of an examination by the Allen Committee and the result of other Departmental inquiries which have been going on could possibly bear fruit in the shape of a sudden and dramatic reduction in the rates. No hon. Member on this side of the Committee has said that.

I can assure the Joint Parliamentary Secretary that no one is blaming the Minister in this context. We are asking what the Government propose to do now, in the present situation. The hon. Gentleman opened the debate today in his old familiar fashion reminiscent of the speeches which he made when in opposition. He seemed to be taking a look backwards to the time when his party was in opposition and he addressed he Committee in the charming fashion in which he used to speak in those days. He did not strike me as a Minister in charge of a Department who was determined to deal constructively with the problem. He was having too much fun. I also got the impression that as a Member of Parliament for a London constituency he felt he was representing London and that there were not other parts of the country where people were worried about rating problems.

I do not think that there is yet any case for criticising this Government for not doing something widespread and long term about a variation or modification of rating policy. It has gone on for too long and there is always the danger that if one anomaly is removed another may arise. There are more pressing things which need attention which some of us were trying to deal with before the last election, and which were made
1467
apparent when the rating reassessment brought the problem vividly before us.

I speak as one who represents a seaside resort where many retired people live. This hardship has hit them the hardest. Areas such as Torquay, Brighton or Rye and Bexhill are regarded as places where wealthy people go for their holidays, and so they do.

But when the holidaymakers have gone home there are left the residents, including many retired people, who have to pay rates which include the cost of the amenities enjoyed by the holidaymakers. These are the sort of problems we must think about. They were made all the more apparent by the recent rating reassessment. If we had been playing party politics the craziest thing that we Conservatives could have done would be to have had such a rating reassessment because the results affected Conservative areas a great deal more than other areas in the country. Retired people formerly living in large properties who have had to move to smaller flats and people on small fixed incomes were hit the hardest by the effects of the reassessment.

I do not want to go into detail about what was said by Ministers in the present Government prior to the General Election, but in its election pledges the Labour Party gave a genuine impetus to the belief that if a Labour Government were returned something would be done. I do not refer to a long-term review in the next five years or so. The fact that a review of almost everything is coming has become almost a day-to-day motif. Everything which requires to be done is to be preceded by a review. But when there was talk before the election about a comprehensive review, an independent investigation and rapid remedial action being taken, people thought that, apart from long-term possibilities, something would be done immediately. Their hopes were raised by the fact that the Rating Interim Relief Measure which was brought in by the Conservative Government—although I agree that it was insufficient—was criticised so savagely by the Labour Party that people believed that something better would be provided under a Labour Government.

What has happened? I have endeavoured, by Parliamentary Question and by letters to Ministers, to discover
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what has taken place. I find that nothing has changed. There is nothing new about the famous comprehensive investigation. All that is going on is a continuation of precisely the same Departmental review which was going on before the present Government came to power. I have asked for the name of the chairman and I have been told that there is no chairman because Departmental reviews do not have a chairman. When I asked for the names of the members I was told that they are generally civil servants in a Department. I have tried to find where the dramatic impetus is coming from, but there is none in terms of early remedial action.

I wish to say a word about what we should start to do. When the previous Government were in office I said the same things, quite rudely, and I think that one of the reasons why I secured an extremely effective majority at the last election was that the Minister of Housing and Local Government, in the previous Conservative Administration, said that I was the biggest nuisance in the Tory party on the subject of rates. Nothing could have done me more good in South Devon than such a remark as that.

There are several things that we ought to do. We should have a look at the present system of assessment. The extraordinary thing is that the more one examines individual cases of property assessment for valuation purposes the more one finds that there are anomalies. Something unique happened in my own constituency. Due to the persistence of my friends in local government in the area we discovered that Paignton was being reassessed in a different fashion from Torquay although the two places are next door to one another. Only when the reassessment had been completed was it discovered that at Paignton the reassessment had proceeded on an entirely different basis. The reassessment there had to be carried out all over again with a great deal of consequent confusion to local finance.

Time and time again it has been shown that assessments have been arbitrary and wrong in terms of comparison. We should be thinking about putting such things right. One could give thousands of examples where trained Treasury officials have been responsible for glaring discrepancies and anomalies even when operating under the existing law. There is a
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case for saying that if the burden has to be great it should at least be distributed fairly under the existing law. If trained revenue officers can be responsible for anomalies, one wonders how the tribunals will work when it comes to deciding rents, about which there is no experience.

If the hon. Member is suggesting that a review of assessments is one way to help the ratepayers, is he suggesting that this should have been done in seven weeks by the Minister before he brought in an Order?

I was not referring to seven weeks or seven months. I said that this is one of the things which ought of be done. I was not referring to something which should have been done in seven months. I said that we should have a check on the methods of reassessment as they exist under the present law.

Now I come to the things which could have been done in the last seven months and which I hope will be done now and during the next seven months.

I was talking about the seven months which the Labour Government has been in office.

What has to be done now and what should have been done by now and what, I hope, has been solved? First of all, I suggest that the Ministers should look again at all the Committee and Report stages of the Rating (Interim Relief) Act. I make the serious suggestion that it would be worth checking through these debates. It will be seen that a number of hon. Members made practical suggestions as to how that Act could be better phrased and framed. If those suggestions then offered had been accepted in the light of what has happened, this Act would have been of much more value than it has been.

I give now only two examples. It ought to be made very much easier to decide what hardship is. Secondly, a number of us argued at that time that the block grant of one half of the relief to a local authority should be given only when tied to a scheme of specific relief to individual ratepayers in a constituency. A number of us thought that those
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grants should not be given to an area and then used by that area to do what it liked. They should be devoted, we thought, to the purpose for which Parliament voted them—the relief of those ratepayers who were suffering genuine hardship. I suggest that the Labour Party would not have had great difficulty in producing a short amending Bill in that context, to try to make that Act work a great deal better as a further interim measure until some of the longer term measures could be worked out.

I do not accept that there is any great difficulty about raising the block grant from the centre as another temporary measure. The hon. Member for Newark (Mr. Bishop) said that the Minister only came into office on 15th October and had to decide by 15th December, and that this was impossible because the civil servants presented him with a fait accompli. That is not acceptable. In the case of block grants, he needed only to say that so many more millions would be given to the local authorities and divided on the same basis as before. That did not require much statesmanship. That would only have needed a straight decision as to whether the block grants should be increased or should be on the same basis as the previous ones.

My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) mentioned the possibility of another look at weighting, as he called it, of central financial relief to the retirement areas. This is something which can be done quickly, to see whether these areas, which are the most hard hit, could have their grants weighted more favourably than at present. This would not require—

So much of what my hon. Friend has said applies to my constituency that I am very grateful that he has covered the ground so effectively. Would he not agree that perhaps the system as it stands is grossly unfair, in that the retired areas, one of which I represent, would be greatly benefited if the rateable value were not only applicable to householders but to those who are earning good incomes and who live in those houses, perhaps as p.gs., or who are people over the age of 21? Should
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this not be possible, under the new system as we envisage it and, perhaps, as the Government consider it, as a means of raising additional rates?

I hope that the Minister will take note too of that suggestion, which could have considerable application to areas which have been the hardest hit.

The Minister ought at once to have another look at the existing powers of councils to remit rates in cases of hardship. This would not need a long-term review or investigation. The powers are there. In some cases, councils are in doubt as to what they are. This could be clarified and their powers extended.

I do not believe that this debate has been conducted from this side in any spirit of party interest over municipal elections. We are too obsessed with the subject. Hon. Members opposite should not be whining about legacies and asking, "What did the Tories do?" Supposing that the Tories did not do everything right during the last 13 years, which I do not admit. Is that an excuse for hon. Gentlemen opposite to do nothing at all except go blah, blah, blah about a possible income tax system under the local authorities in years to come. They have said nothing worth while about this problem nor about their responsibilities to relieve rates. It is time, that they accepted them and did not still try to shift all the blame on to this very temporary Opposition.

I would not say that the hon. Member for Torquay (Sir F. Bennett) has made an unreasonable case, but I would say that the majority of hon. Members who have spoken from that side of the Committee have struck me with the appalling effrontery with which they have tackled this subject. It is all very well to say that we should not deal with the problem of the last 13 years, but hon. Gentlemen, led by the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), began this debate with a full-blooded attack on my right hon. and hon. Friends for what they had not done in the short period they had been in office.

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I want to remind the Committee once again that the right hon. Member for Kingston-upon-Thames and those people who have attacked my right hon. Friend in this way have a very poor background to make this sort of assault on the Government. They did nothing effective to tackle this problem in 13 years. The Rating (Interim Relief) Act was a pitiful Measure which is of no use today to the vast majority of people. With all due respect, even the Allen Committee, which gave us the facts, merely told us what many of us already knew to be true. None the less, during the period that the Conservatives were in office rates were rising very steeply the whole time.

My hon. Friend the Joint Parliamentary Secretary referred in his remarks to the heavy rise in rates in the London area, and I want to deal with remarks made by hon. Members opposite attributing those increases to the Socialist administration in certain local areas. That case does not hold water. The true reason for the very steep increase in rates in the London area is the local government reorganisation which was the responsibility of the last Government.

I was appalled to learn of the extent of these increases in part of my constituency, in Chingford, which is part of the new London Borough of Waltham Forest, so appalled that I raised the matter in all sorts of ways with my right hon. Friend and on 7th April I raised it on the Adjournment. I recollect that on that occasion not many hon. Members opposite, who had constituencies faced with identical problems, were in their places.

In the London Borough of Waltham Forest the rate in the £ has gone up to 13s. 1d., representing in the old Borough of Chinford an increase of 3s. ld. from the previous 10s. This increase in no way derives from the Socialist control of the London Borough of Waltham Forest. If one examines the problem carefully one can analyse some of the reasons and see that they have nothing to do with the local administration. The general grant to Waltham Forest was greatly diminished compared with the general grant previously made to Essex County Council, which formerly administered many of the services in the area which is now Waltham Forest. The diminution in the grant was from 72d. to 62d.
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The new borough has had to take over a heavy burden for housing and redevelopment in the Leyton area. At the same time, owing to the system, the area which previously comprised the three boroughs of Walthamstow, Leyton and Chingford, lost the rate deficiency grant to which Leyton would have been entitled had the reorganisation not taken place.

In other words, the average rateable value within the new Borough of Waltham Forest was higher than the average throughout the country, although the average rateable value within Leyton, which makes up only part of the new borough, was lower. The result was that £85,000, which, under the old scheme, would have gone to Waltham Forest, did not go at all to the borough as a result of the London reorganisation, but was saved by the Treasury.

There is also the question of the compensation to be paid to the truncated council. In addition, many services previously carried out on a large scale by the County of Essex—and this applies to other counties which lost part of their population—have to be carried out on a smaller scale by the new London boroughs, and it is obvious that it will be a much more uneconomic proposition than it was in the past.

I am sorry that the hon. Member for Twickenham (Mr. Gresham Cooke) has left the Chamber. I am sure that in pressing for the area which he represents to have power over education he was also pressing for a whole set of administrative officers to be established, who would raise the total cost of providing education within that area.

It is not surprising that the steep increase in rates in Waltham Forest is parallel with what has happened in the outer metropolitan ring—in Twickenham, Richmond, and so on. As a result of the local government reorganisation which was carried through in the London area, the outer metropolitan ring has taken the burden of the rate increase. It is important that this should be driven home because many of the people who have traditionally voted Conservative have received extremely unfair treatment as a result of that reorganisation which was carried out by the former Conservative Administration.

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It is no use hon. Gentlemen opposite saying that rate increases have resulted from the actions of the Socialist-controlled boroughs; that is, those which were won by Labour last year. Suggestions of that sort are merely a smokescreen. The true cause must be recognised to have been the local government reorganisation. If not, how can it be explained that the jump in rates was so great this year compared with the increases which have taken place in recent years?

The hon. Member for Brentford and Chiswick (Mr. Dudley Smith)—who, I regret to say, has also left the Chamber—blamed the Socialist-controlled councils. He adduced a most disreputable argument, an argument that is untrue, misleading and crude party propaganda. It will help nobody to get to the root of the problem which we should be seeking to tackle.

I listened with considerable interest to the remarks of the hon. Member for Twickenham, particularly when he spoke about the borough with which he is associated. I, too, am dissatisfied that Waltham Forest should suffer compared with Havering in respect of general grant. The reason why Havering did so much better for general grant was its much larger population of school children. The whole basis on which the general grant is paid requires review.

I remind hon. Gentlemen opposite that the Labour Party opposed the introduction of the block grant system. Some hon. Members have argued for education costs to be borne to a much greater extent by the central Exchequer. While I applaud their conversion to the policy of the Labour Party in this respect—and our comments on this in our election manifesto should be noted—I wonder whether hon. Gentlemen opposite are advocating a return to the specific grants system. Do they recognise the unfairness of the block grant system, an unfairness which we pointed out many times in the past? If the teacher shortage were solved the rating system would break down with the general grant system in operation. There is no doubt about it. The general grant system is a means of trying to rectify the inequalities which exist between different localities, but it is not a satisfactory means of achieving that.

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What is the objection to increasing the dependence of local authorities on the central Exchequer for finance? It is the idea that this would destroy local autonomy—that he who pays the piper calls the tune and that the central Government would call the tune.

It would be regrettable if we allowed more and more centralisation of power. I want local authorities to remain in control of their own affairs, but we must recognise that it will be impossible for local authorities in future to raise even the measure of local finances which they raise now. There is need, therefore, to create a new system which must put local finances on an equitable and fair basis and must preserve the power of the local authorities.

It is childish, as I have said, to suggest that the local party control of a council is fundamentally the reason why that authority has high rates. Whatever a local authority does is very much pressed upon it by the general terms of reference laid down by the Government. The proportion of State contribution from taxation to local finances must clearly be very much higher in the future than it has been. I want to see a large measure of the burden of local finances transferred to the Exchequer, but it is essential at the same time that a proportion should still be raised locally.

I do not know whether any hon. Member would suggest that we should transfer the whole burden to the central Exchequer, and I do not propose at this stage to pursue the various suggestions which have been put forward for raising local finances by other means. Many arguments can be put against most of these ideas, but we should accept the criterion of ability to pay in determining who will meet the cost of providing local services and pay for local redevelopment.

I want to add my congratulations to those already accorded to my hon. Friend the Joint Parliamentary Secretary on his speech today. He made it clear that we on this side of the Committee do not accept for a moment responsibility for the state of affairs which has been bequeathed to us. Furthermore, we know that a review of the rating system is taking place and that the problems will be tackled in due course. However, I
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want to urge the utmost speed on my hon. and right hon. Friends, not merely because of the hardships imposed upon the old people, which are recognised to be considerable, but also because of the hardships imposed upon young married couples who are forced to pay fantastically exorbitant prices when they buy a house and then find, after being saddled with tremendous repayments on the mortgage, that the rates are spiralling up as well.

Many of these young people who are aspiring to become owner-occupiers, as so many of them are in my constituency, are in dire difficulties. Therefore, there is need for tremendous speed. [HON. MEMBERS: "Hear, hear."] I am glad hon. Members opposite give me support on this. I am certain that this is a sentiment of concern for owner-occupiers which is not confined to one side of the Committee. [HON. MEMBERS: "Oh."] I am prepared to debate that with anyone who wishes to debate it with me on some other occasion.

Hon. Members could show their sincerity in helping the Government to get down to their policy by not pressing for so many Bills to be taken on the Floor of the House. In my view, that is obviously a delaying tactic, and since I have become a Member I have been struck by the amount of time that we waste here when we could be getting on with the job. If hon. Members opposite are so concerned about helping my right hon. Friends to get through the sort of changes which are required to deal with the rating problem, I hope that they will help us to speed through some of the other legislation which is very pressing. [HON. MEMBERS: "Drop steel."] I myself would not for a moment consider dropping steel, and, if it were in order to do so, I should be prepared to discuss why I think it vital that steel should be nationalised.

I want my right hon. Friend to tackle the problem of rating relief with the greatest possible speed, but will he consider the introduction of interim measures, if necessary, to deal with matters at an even earlier stage? My hon. Friend the Parliamentary Secretary rightly pointed out that people can turn to the National Assistance Board, and I hope that we shall be able to persuade people to look in this direction whenever there is no
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alternative; but let there be no mistake that lots of old people feel that to go to the National Assistance Board is to turn to some form of charity.

That may be a wrong attitude, but it is an attitude which exists. Many people in my constituency, in Chingford particularly and in other parts, have told me, in spite of all that I have pressed upon them, that out of pride they would never turn to the National Assistance Board. There is need to introduce some other interim measure of relief which will enable people to get the sort of help they must have in meeting the exorbitant burden of rates, particularly in the outer metropolitan belt to which I have referred, without going to National Assistance.

The debate has shown the complete bankruptcy of the Opposition in dealing with this problem. I am glad that the right hon. Member for Kingston-upon-Thames has returned to the Chamber, because I wish to comment on his speech. The way the right hon. Gentleman dodged giving a clear answer to the question put by my hon. Friend the Member for Barons Court (Mr. Richard), when he asked what the policy of the Opposition was, revealed how bankrupt the Opposition are of ideas about rating reform. It is all very well to criticise us as they do, but destructive criticism is not what is called for. As a new Member of the House, I had hoped that we should have a much better show, and I was at least glad that some of his hon. Friends put forward some constructive suggestions which contrasted sadly with the negative contribution made by the right hon. Gentleman himself.

There are two further points which have some bearing on the problem. [HON. MEMBERS: "Oh, no."] One factor which has greatly increased the charges on local authorities is the tremendous increase in the price of land. I look forward to the Measures which are being prepared by the Government to deal with this problem. When they were in office, the Opposition consistently refused to apply themselves to it. We shall in due course deal with the problem of interest rates as well. [Laughter.] Hon. Members opposite seem to forget that they were responsible, over many years, for forcing local authorities to
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raise their finances in a way which resulted in the pushing up of local interest charges. They know that very well if they are honest about it. But we shall tackle both land prices and interest rates, giving enormous relief in due course to ratepayers.

I am confident that it will be my right hon. and hon. Friends who will tackle the problem. We on this side shall not fail in this matter. I urge my right hon. Friend most sincerely to recognise the great burden which many ordinary people are bearing today and to act with the greatest possible speed in tackling the whole problem.

I shall endeavour, in about one-fifth of the time taken by the hon. Member for Epping (Mr. Newens), to be at least equally constructive. If there are some gaps in my reasoning, I hope that the Minister will understand why.

We should be far wiser to base our approach to this difficult problem on a recognition of the fact that rates have far more in common with direct taxation in their characteristics than is sometimes realised. If we bear that in mind, the changes may not need to be quite so fundamental as some hon. Members have said. I suggest that, when we talk about scrapping the whole system, we ought to think of the very large revenue already raised from industry and commerce, which, while it may be rising too rapidly because of the general increase in rate expenditure, will not easily be replaced from some other source.

It is when one begins to study the contrast between the incidence of direct taxation on households in different income groups and the incidence of rates upon them that the injustices are high-lighted. The correct road to a solution becomes a good deal clearer if we keep this in mind. To take the most obvious illustration—perhaps it will have to be my only illustration—under the operation of age-relief a married couple qualified for age relief pay no Income Tax on an income up to £625. This is a relief as against other taxpayers whose income is all earned of about £30 per annum. If their income is all from investments the relief is no less than £70 as against taxpayers of
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the same income, yet they enjoy no relief from rates.

A married couple not over 65, without children, with an income of £900 per annum, all earned, pay over £100 in Income Tax. Yet a married couple with three children and the same income pay no tax. In other words, there is a difference of £100 in the incidence of direct taxation on the two families. Yet, if both families live in comparable homes they are liable to the same rate burdens without differentiation.

I am sure that a coding system could be devised to give substantial rate remission to those households which have special circumstances of hardship which are recognised under the direct taxation system. The local authorities should be reimbursed from the central government for their shortfall as a result of any such remission. I do not think there would be any reason why such a system should not be continued when in due course the wider reforms of local government finance are made. Indeed, I believe that some preliminary changes of this nature might make the subsequent and more sweeping reforms easier rather than more difficult.

I believe that to change and ease the rate burden on the circumstances of the individual involves considerable administrative effort. I believe, however, that it is right to weigh the administrative effort against not the proportion of the national income involved but the proportion of the national hardship which will be alleviated and also the proportion of the national injustice which will be removed.

I fear that I must leave my supporting arguments to the imagination of the Minister and the Committee. However, I am very grateful indeed, in view of the very large number of elderly people in my constituency suffering considerable hardship, to have had a brief moment at any rate to put forward some views on this subject.

My hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) has touched on a very important point, as many hon. Members have during the debate. This illustrates how very right the Opposition were to decide to devote
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one of their Supply days to this very important topic.

The Joint Parliamentary Secretary, in his opening remarks, suggested various reasons why we should have decided to debate this topic. There are three very good reasons why we decided upon it. First, there was the very important Report of the Allen Committee, which is full of interesting statistical detail pointing out the many problems that exist under the present rating system. Secondly, we thought that we had reached a time when all the major parties were agreed that there was a need basically to reform our system of rating. Certainly, I think it is rather fortunate that we have had the debate, because, as the Joint Parliamentary Secretary made perfectly clear, the Government do not have any ideas on this subject. Indeed, they very much asked for suggestions. During the afternoon we have had many constructive suggestions, particularly from my hon. Friends the Members for Brentford and Chiswick (Mr. Dudley Smith) and Chichester (Mr. Loveys).

We have also had the suggestions of the Liberal Party. As is typical of it, the Liberal Party went back to the old proposals of Lloyd George and suggested that what is good for Lloyd George and Whitstable is good for the country. The Liberal contribution dwelt for a long time on the subject of site value rating and the rating of open spaces and vacant premises. Throughout the debate the most obvious open space has been the Liberal benches. Therefore, it was surprising that the Liberals raised this topic.

The third reason for the debate—a perfectly correct one for an Opposition—was that we wished fully to expose the blatant manner in which the Government have failed in any way to keep their election promises. Let us make it perfectly clear that in the Labour Party manifesto there were two promises. One was that the Government would review the rating system and bring in some appropriate reform. But the Government have pleaded, quite reasonably, that within six months of coming to power and looking into this very complicated problem—as has become obvious throughout the debate—it became clear that it was unreasonable to
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expect them to have come to their conclusions already. This we agree.

But the second part of the Labour Party's election manifesto stated quite clearly that they would seek to give early relief as an interim measure to the ratepayers concerned. I shall seek to show that they have done nothing of the kind. In fact, rather than give relief to the taxpayers concerned they have added to the burden.

The Joint Parliamentary Secretary suggested as the main reason for the debate that we were going vote-catching on this issue. If ever there was a case of evil thinking as evil does, it was this. There was no topic other than mortgage interest rates on which the Labour Party endeavoured more to obtain votes at the election than that of taking immediate action about the rates.

The speech of the Joint Parliamentary Secretary was divided into three parts. The first part was devoted to the plea that this was a vote-catching exercise. The second part dealt with the problems of London. He pointed out that there had been a far steeper rise in rates in London than elsewhere, and he gave certain reasons for it. The reason that he preferred was that the reorganisation of London local government had added considerably to the burden on London ratepayers. He also agreed that some of the treasurers concerned had over-budgeted and added to their resources. This is probably true. But the hon. Gentleman failed to explain why of the 16 boroughs in London with the biggest increases only two were not Socialist-controlled, bearing in mind that more than a third of the boroughs in London are held by the Conservatives or the Conservatives and other parties jointly.

In its election manifesto the Labour Party said that it was going to give early relief to the ratepayers. If it had so desired, and decided that such was the burden on the London ratepayers, it could have given a special grant to them. It could have decided that as it had said it was going to give them early relief, it was going to transfer some of the burden from the ratepayers to the taxpayers and that as these particular ratepayers had such a burden it was going to give them some form of immediate relief. It has not done this.

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The last part of the Parliamentary Secretary's speech started with the words "Now, to deal with the future …" and we all waited and hoped to hear what we thought were going to be the policies in pursuance of this election manifesto. But the next words he uttered were "I have no announcement to make", and that, of course, sums up the future as far as this Government is concerned. The right hon. Gentleman accused the Opposition of making a quite unreasonable suggestion that all promises have not been redeemed in six months. We do not complain that the promises have not been redeemed in six months. All we complain of is that in those six months nearly all the promises have been reversed.

During the course of the debate the Parliamentary Secretary suggested that during the 13 years of Conservative Government nothing had been done for the ratepayers. I completely repudiate this charge and would like to spend a few minutes reminding the Committee of the changes that took place as far as home owners were concerned during the period the Conservatives were in power. As far as rates are concerned, it must be realised that in 1951 there had not been a revaluation for 17 years. Industry was receiving a 75 per cent. relief on the rates and little was known of the detailed effects of the rating system upon the individual. During our period of office there was a complete revaluation on all properties throughout the United Kingdom. Industry was made to pay a fairer share of the rate burden. As my hon. Friend the Member for Chichester pointed out, there has been an important interim rating measure designed to assist those local authority areas inhabited by a large number of retired persons.

The Allen Committee was set up and was close to reporting on the detailed effects of the rating system. We have also started a major inquiry into the whole future structure of local taxation. In respect of rating we must remember that when we came into office there were three forms of taxation relating directly to the ownership of a house. There was first the 2 per cent. Stamp Duty charge upon the value of the house at the time of purchase; secondly, the Schedule A tax, andthirdly, the local authority rate. At the end of the period of Conservative Government two out of these three taxes
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had been abolished and a person purchasing a house at the end of this period would therefore, over the first 10 years as owner of a £3,000 house, pay £60 less in taxation as a result of the abolition of Stamp Duty and something like £100 less in taxation as a result of the abolition of Schedule A. These two measures alone would have given him considerable tax relief compared with the total tax burden of Stamp Duty, Schedule A and the rates that existed when we came into power.

Since hon. Gentlemen opposite have been in power there has been no relief at all. I hope that the Minister of Housing and Local Government will give some details of the relief that has been given in the last six months, for he has a lot to answer for and it is a very important occasion for him. In the Sunday Citizen of last Sunday it was reported:
Housing Minister Richard Crossman will have a chance to repolish his speech-making reputation in the Commons this week. Subject—rates.
The article said:
The Tories plan an attack on the Government's record. Mr. Crossman's Parliamentary image is slightly tarnished after a poor performance in the home loans debate.
I must confess that I thought that his speech of last week was certainly of his usual standard. It is not the speechmaking of the Minister which is tarnishing his reputation, but his lack of action and his failure to fulfil the promises of the Labour Party. One always listens to the Minister with interest and to the lucidity of one who benefited from and had the advantages and perhaps the disadvantages of a Winchester education. [Interruption.] I say this full of admiration, because it is interesting that in this Cabinet there are two people who have had the benefits of such an education and I remember the right hon. Gentleman writing about the other Wykehamist in the Cabinet, the present President of the Board of Trade, and saying that he had a masochist love for high taxation. We are wondering whether this Wykehamist has a masochist love for high rates.

If the record of these two Ministers is examined, it will be seen that the result of their achievements in six months is that one of the Wykehamist members of the Cabinet has put up the cost of our imports by 15 per cent. and the other has put up the cost of rates by 14 per cent.

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On examining the right hon. Gentleman's remarks on the subject of rates over recent weeks, we discover that he has been complaining about the manner in which he was left with a rising rate bill. In his speech in the Prime Minister's constituency in February—a remarkable speech for the fact that it disclosed that the Minister of Housing did not really know what was going on with rates, because he suggested that he had inherited from the Tories a position whereby rates would be rising by 9 per cent. per year and then, two months later, we found that rates had risen by 14 per cent. this year—he complained that it was the Tories who had committed us to all this future expenditure and that therefore rates were bound to rise.

Of course, he did not suggest to which of the expenditures to which the Tories had committed the nation he objected. He did not suggest that he had any objection to expenditure upon services for old people, or health services, or the other increasing programmes which he mentioned in his speech.

Another interesting thing is that he made no comment at all upon the one item of increased expenditure which he knows to be more important than any other, namely, education. One can understand the right hon. Gentleman being a little nervous about stating the reason for the position in which the Tories left us, in which rates were liable to rise by 9 per cent. per year, when the main reason for that calculation was the expenditure on education, because the right hon. Gentleman is the last person who can criticise the future planned expenditure on education. He used to be the shadow Minister of Education and he may well remember that passionate party political broadcast which he made 10 days before polling day when he said:
This year for example, the local authorities submitted school building programmes worth £170 million, and every school in their programme was absolutely essential or it wouldn't have been included. The Minister cut them back from £170 million to £50 million. In fact, he forebade the councils to build two-thirds of the schools they desperately needed and which they could build if they hadn't been prevented from doing so. I call that rationing even if another name is used today.
There is no sign of the rationing being ended. None of the local authorities has been told that they will be allowed the £120 million worth of schools which were
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not allowed last year. To the contrary; not only is the Minister of Education complying with the school building programme prepared by the Conservatives, but the programme of minor improvements has been cut. So, to use the right hon. Gentleman's expression, the rations have been reduced.

In these circumstances, there are three things which the Government could have done. First, they could have increased expenditure to meet their election promises and put an additional cost on the ratepayer. Secondly, they could have increased expenditure to meet their election promises and put an increased cost on the taxpayer. Thirdly, they could have decided, irrespective of their election promises, to switch some of the burden from the ratepayer to the taxpayer as they outlined in their election manifesto. In fact, they have achieved an incredible treble. They have not increased expenditure to meet their election promises, but they have managed to increase both taxes and rates.

I apologise for referring back to the debate on mortgage interest charges, but there are so many similarities between that debate and today's debate. First, both debates were on the subject of broken Government promises. Both debates illustrate that the Government have no action in mind to tackle the real problems involved. Both debates have resulted in the Government being exposed for having increased hardship and not eliminating it. In that debate, the Minister of Housing and Local Government boasted that the mortgage interest rates promises had gained the Labour Party many thousands of votes. Doubtless that is a boast which he will be able to repeat in this debate, because certainly its pledges on the rates gained it many thousands of votes.

I should like to examine in some detail the action which has been taken to fulfil these promises. Let me give a round-by-round commentary—or rather a blow-by-blow commentary—on the "relief" which the Government have given during the last six months. On 11th November they announced an increase of 6d. a gallon in the petrol tax. This involves considerable expenditure by local authorities and is bound to increase the rates. On 23rd November they announced that Bank Rate was to be increased to 7 per cent.

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It is true that the Minister of Housing implied a few weeks later that this would be for only a very short time; but in fact, it has continued ever since.

Let us be perfectly clear that the increase in Bank Rate to 7 per cent. and the considerable increase in the cost of local government borrowing is a major factor in the increase which is taking place in the rates and is a very heavy burden on local authorities. It is remarkable that neither the Joint Parliamentary Secretary nor any hon. Member opposite who has spoken today made any point of the heavy burden of the 7 per cent. Bank Rate and of increased local government cost of borrowing as having been a major issue in the 14 per cent. increase in rates. They used to consider that it was the only issue in increased rates.

The Prime Minister, in his opening television programme in the last election campaign, used these words:
The Government, as a matter of policy, have raised interest rates"—
he was referring to the Conservative Government—
and this is why council house rents and building society mortgage repayments, and rates, have gone up".
If we examine the speeches of the Prime Minister, the first Secretary and the then shadow Minister of Housing throughout the election campaign, we find that the only reason which they gave for the high burden of rates under the Tories was the high Bank Rate.

When the Prime Minister made this speech on 28th September Bank Rate was 5 per cent. It had been 5 per cent. or less for the previous two years. If after two years, the Bank Rate being at 5 per cent. or less, the Prime Minister can tell the country that this is the main reason for the rise in rates, what will he tell the country when for virtually the whole of his party's period of office Bank Rate has been at 7 per cent?

That is only part of the story. Let me continue my round-by-round commentary. I hope that we will not get tonight the rather weak excuse given by the Chief Secretary last week that it was because of the terrible economic crisis. [Interruption.] If we are to have that excuse, let me say in advance that hon. Members opposite should read the speech made by the Prime Minister in New York,
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where he boasted to the Americans that the reason why there would be no devaluation of sterling was that he inherited from the Tories £11,000 million worth of overseas investments.

Continuing this sad story for the ratepayer, on 15th December the Minister of Housing and Local Government dashed all hopes that he would fulfil the election promise of immediate relief by announcing the general grant for the next two years and that it would be identical in proportion to the general grant of the previous Government. Therefore, at this stage, people began to realise that not only would the Government not keep their election pledge, but that rates were going up because of various actions by the Government.

On 25th March, there was an increase of 33⅓ per cent. in the cost of postage, another burden upon local authorities and upon ratepayers. [HON. MEMBERS: "Why?"] The best reason I can give is that the right hon. Gentleman who is now Postmaster-General holds that position. On 29th March, continuing this blow-by-blow commentary, National Insurance contributions by the local authorites were increased by 3s. 3d. a week for each employee, another important burden upon local authorities.

On 6th April the Chancellor presented his Budget, the second Labour Budget without any relief for the ratepayer. I say "without any relief", but I must confess that there was some relief. Although in the Budget speech there was no mention of the election promise to transfer the burden from the ratepayer to the taxpayer, and although there were certain proposals affecting local authorities, the only one that can really be said to be a relief is contained in Clause 6(1) of the Finance Bill, where we find the happy news that to the list of vehicles which are to be exempted from the vehicle excise duty are to be added local authority watering vehicles, a concession which, I believe, will help the average ratepayer by ld. over the next 30 years.

Contained in that same Finance Bill, however, are two other blows to local authorities and to the rates. The first is the 50 per cent. increase in the cost of licences for many local authority motor vehicles, adding a quite substantial sum
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to their costs. The second is the manner in which the Capital Gains Tax has been calculated to apply to local authority redeemable stocks. This will certainly increase the cost of local authority borrowing in the future.

Almost exactly 12 months ago, in a party political broadcast prior to the local elections, the First Secretary—Mr. Three Per Cent.—referred to the misery of those who had to pay high mortgage repayments and coupled with this the following comment upon the rates:
Rates have now become a dreadful burden on countless millions of families in this country.
If last year's rates were a dreadful burden on millions of families, after six months of a Labour Government the burden has been increased by 14 per cent.

The technique of the party opposite is a simple one. It is one at which the Minister of Housing and Local Government is particularly skilful. Doubtless, we shall see his type of performance tonight. We saw it last week. It was a performance whereby they say with great enthusiasm and great energy, "We still believe in all the promises which we have broken." What one finds with this Government is that the more a promise is broken the more enthusiastic they become about the original promise. Last week we heard from the right hon. Gentleman that there is to be no early relief through mortgage interest rates. This week we hear there is to be no relief for the ratepayers.

The hon. Member for Orpington (Mr. Lubbock)—obviously tonight not an effective Whip—said that the Joint Parliamentary Secretary really had no need to make his speech this afternoon because he said nothing at all except that he wanted suggestions. I think that the Minister himself delivers this type of speech, the type of speech he made last week about mortgage interest rates. He could, in fact, just ask the Whips to make the speech for him, because they are used to saying what the Minister always says, namely, "Tomorrow, Sir." In fact, this is a "Tomorrow, Sir" Government. For anybody who wants lower mortgages it is, "Tomorrow, Sir". For anybody who wants lower rates it is, "Tomorrow, Sir." For anybody wanting lower taxes it is "Tomorrow, Sir." For anybody wanting lower prices it is, "Tomorrow, Sir."

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People are beginning to realise, however, that for this Government tomorrow never comes, and it is for this reason that when the final day of reckoning does come—[HON. MEMBERS: "Ah."]—their tomorrow will be spent on these benches, finally defeated.

I think that it is a very striking thing to compare the tone and content of the speeches we have heard today from the Opposition Front Bench with that of those we have heard from the Opposition back benches during the time when a number of hon. Members were out of the House and the back benches were talking to one another and when we had a number of fairly solid, sometimes debating, but fair[...]y effective speeches on the problem of the rates. We had the entertainment at the beginning and the end.

I was asking myself, when I was listening to and enjoying the entertainment, what was it which explained this difference between the two, the Front Bench speeches and the back bench speeches. Of course, we know that anyone who has to speak from the back benches speaks knowing his speech is likely to be printed in his local paper, knowing that he has to talk in relation to the problems of his own constituents, knowing that he has to represent people who understand the facts about the rates and who also have slightly longer memories than they who now sit on the Opposition Front Bench.

I must say that I have been surprised—in a way, I suppose, relieved—to see how quickly the memories of responsibility and of office fade when one gets into the irresponsibility of opposition. During the speech which we have just listened to, the speech by the hon. Member for Worcester (Mr. Peter Walker), I thought it just worth quoting to the Committee a pledge—for we have heard a lot about pledges—which was made by the Conservative Party. It was headed, "Local government finance", and it was in an election manifesto.

One forgets one's pledges when one leaves the Government and goes into opposition. The Tories said:
The problems of local government finance will receive our urgent attention. They must be considered afresh in the light of present-
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day conditions … we shall review the proportion of the rate burden falling upon the different groups of those who occupy property and we shall consider whether any changes are needed to remove injustice.
They claim that they carried through their reforms, but they now admit—this is what we heard from the right hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter)—that their reforms of local government finance have left it in a desperate situation.

This was the one thing on which both sides were on agreement. The Committee learnt from the right hon. Gentleman that drastic changes had to be undertaken. The only difference was that members of the Opposition Front Bench were anxious to exculpate themselves from any kind of responsibility for the rating system which we inherited from them. So many figures have been bandied about that I thought I had better get the official figures of the increases in rates since 1962. In 1962–63, there was an increase of 11.3 per cent. In 1963–64, there was an increase of 10.5 per cent. In 1964–65, there was an increase of 8.5 per cent., and in 1965–66 there was an increase of 11.5 per cent. Those are the four most recent increases.

My hon. Friend the Member for Newark (Mr. Bishop) fairly pointed out that I literally took the general grant left us by the Tories. We inherited this from the previous Government and within a few weeks of our coming to power we had to decide whether to put it through. We did so, and I confess quite freely that I passed a general grant and maintained a rate system which was 100 per cent. Tory.

This year people will be paying the rates which the previous Government had arranged that they should pay. I was delighted to hear hon. Gentlemen opposite, who were responsible for fixing them, agree with what I said when I passed the General Grant Order, that these sums were hopelessly unsatisfactory, but that in the time available we had no choice other than to put them forward. We are advancing a little in the education of the Opposition Front Bench. They now agree that these are Tory rates, and that our crime is failing, in the six months that we have been in power, to transform the Tory rating
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system which they have been attacking the whole afternoon.

I heard the right hon. Member for Kingston-upon-Thames say, "Oh, dear. We might well have to switch from rentable value to capital value". Hon. Gentlemen opposite had 13 years in which to deal with the rating system. We have heard references to how the poor old people in Bournemouth have to suffer. They have been suffering for many years, and nothing was done by the party opposite to help them. The Opposition were responsible for introducing every item which they attacked today.

Having made that first simple point, I want to answer the questions which have been put to me by hon. Members on the back benches opposite.

I have been asked a number of questions to which I am expected to reply. When I have dealt with them as fast as I can, I shall deal with the central issues put to me by the Front Bench, and we shall have our usual row about them. But, first, I want to answer the points put to me by hack benchers.

There have been a number of important speeches about a radical reform of the rating system. The Committee has the right to ask us to explain our view on these long-term problems of the basic reform of the rating system which were referred to by the hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott), the hon. Member for Chichester (Mr. Loveys), the hon. Member for Brentford and Chiswick (Mr. Dudley Smith) and, in a powerful speech, my hon. Friend the Member for Wandsworth, Central (Dr. David Kerr).

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The hon. Member for Brentford and Chiswick said that we ought to have a local income tax. I was always a local income tax person, but the difficulty is that the methods of collecting Income Tax in this country, under P.A.Y.E.—where we collect people's earnings according to where they work—would make it extremely difficult to turn Income Tax into a local tax. It could not be levied by the same machinery, and the creation of a second type of machinery for levying local income tax would be an extremely expensive performance. It is, therefore, unlikely that any Government can rapidly switch from rates to a local income tax. We have got to face that as something which cannot be done.

In reply to the hon. Member, and to other hon. Members, I would say that what we face now is a situation in respect of rates which is so serious that we must introduce reform and a radical change in the shortest possible time. We cannot postpone the change in order to go for a radical long-term policy. I do not disagree with hon. and right hon. Gentlemen who have emphasised the urgency of basically changing the rating system which we inherited, and which has been bad for five or six years.

It has been bad. It has been growing worse, and we really have a grave situation, in the sense that the old retired person living on a fixed income cannot take the automatic 1s. in the £ on the rates which is being added each year. It is an appalling burden upon him and it also economically dangerous that rates should be reaching a point where, if we increase them any further at the same rate, the result will be a breakdown of taxation.

No one can afford to tolerate rates going up at a compound interest of 8 per cent. Here, I would point out that I simply translated the figures into constant value; that is the difference between the right hon. Member and myself. We cannot tolerate a continued increase of this kind because people will not be able to pay at that level in three or four years' time. The system must be changed. It is a system that we inherited, and have had upon our hands for six months, and which the Opposition had for 13 years. I agree that it is an outrage that it should have
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been left for as long as that. I do not recall hon. Members opposite taking any share of the blame. I do not know why they did not put it straight when they had the chance to do so.

The hon. Member for Harwich (Mr. Ridsdale) asked why we were waiting for more research on the subject. In my view, the Allen Report was the last piece of research required by any Minister before making up his mind. We do not lack facts about the rates. Hon. Members opposite could have made decisions about the rates. They did not want facts; they wanted guts. They did not have the guts; they did not have the courage to act. Now we have the fantastic situation in which the party which, year in and year out, funked doing the job, is working itselt up to the view that people who came into power only six months ago, who are preparing their reforms, are breaking their pledges.

We shall reform the rates. One of our difficulties in carrying on a debate in the House of Commons is the frivolity of the Opposition. [HON. MEMBERS: "Hear, hear."] Yes—they are frivolous, arrogant, impudent, and silly. Let us get it clear. The reason why the Opposition, when in power, did not reform the rating system, was not, as they pretend, lack of the Allen Committee's Report. It is a useful addition to our knowledge. It confirms what we all knew, that old people are suffering hell under the rates—that the poorer they are, the heavier is the burden. We did not need a collection of distinguished academics to tell us that, but it was a useful thing for them to do and we are grateful to them for it. We know that they were given the job in order to postpone a decision. Now no one is postponing it at all. I am telling the Committee what we intend to do about it. The hon. Gentleman said that we could not be blamed for not having introduced the Bill in this Session.

I will deal with the problem of special assistance, which has been put to me by many hon. Members. I was asked whether we could help people, especially old people, on fixed incomes. What are the present facts? Under the law there is a very limited power for local authorities to do this. They can do it only in cases of poverty normally covered by
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National Assistance and there is power under what we now know to be the extremely inefficient and incompetent Tory legislation which, we are all agreed, does not work.

For there to be special assistance there would have to be legislation to make it effective. It is also clear that there would have to be large-scale Exchequer grants. It is clear that the distribution of these people is not equal over the whole of the country and that it would be unfair to leave it all to the rates. The rates will have to take one part, but the large part will come as something from the Government.

The second point is that we are pledged to introduce an income guarantee, and we shall do so. The income guarantee is special assistance for old people and for widows. My right hon. Friend the Chancellor of the Duchy of Lancaster and others are working out plans. We shall be presenting to Parliament a plan for this special assistance—[HON. MEMBERS: "When?"] It was in the Queen's Speech and they are getting the Bill ready. It will be ready before our Rates Bill. They will do it. That is one aspect which is being prepared. It is an income guarantee which will ensure that if anyone's income falls below a certain level he will be assisted up to that level with assistance, of course, in rent and rates. This will be part of the guarantee. It will not help in respect of young people with large families, so there will have to be something more than that. We shall have to do something through the rates and, in my view, the main part of this should be and must be done by the taxpayer in a particular way.

Now I turn to the question asked by my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Rhodes) and by the hon. Member for Newcastle-upon-Tyne, North. They indulged in a city conflict on the subject of central redevelopment. I was asked what we were going to do in the new reform of rating about central redevelopment. It is true that the great reform of rating introduced by the Opposition after their pledge was the general grant, and under the general grant came town planning. As a result, there is no money for central redevelopment; it got squashed and flattened out in the general grant.

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So it is quite clear—we are pledged to this and we shall do it—that general grant in its present form is not likely to survive. This Tory "reform" will have to go. We shall have to have a special grant for education and once more take education out of the general grant. The general grant, in its present form, is unrealistic. If we take education out of the general grant, and central redevelopment is taken out, we can really say that something has to be fundamentally changed.

I will tell the Committee that in this respect we have made up our mind, that we shall have to have a special grant for education and for central redevelopment as well. I thought that the hon. Member for Newcastle-upon-Tyne, North, was rather harsh in blaming the Newcastle City Council for the cost of central redevelopment. It is an enormously costly thing. We shall have to have Exchequer assistance for areas where it is necessary. There will have to be a special grant; it something that we shall do. All this comes to the conclusion that in the long-term reform the general grant in its present form will almost certainly disappear.

I turn to the question which was put to my hon. Friend the Joint Parliamentary Secretary, but I will answer on his behalf, and faithfully, about London rates. I want to say again something which he said. Of course, if we had only had the election three months' earlier, we should have been able to scrap the present organisation of London and retain some of the essential central services. But one or two are being jeopardised by the reorganisation and have been greatly damaged. We have had to set up enormously expensive independent services in each borough. We should have been able to do that if they had not played the thing out, but had had the election in May.

With an election as late as that, we could not get the legislation through before March and we have been confronted with this over-cumbersome bureaucracy, which is extremely expensive—[HON. MEMBERS: "Oh."] Yes. The expense of this new bureaucracy in London is a factor in increasing the cost of London government. Anybody who denies that knows nothing about the situation in London.

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It is, of course, true, as the hon. Member said, that there is a startling distinction—he was most surprised to discover it—between the position of Westminster, where I am a ratepayer, and that in the East End of London. These East End people, he said, seem to spend more. Their rates are higher than Westminister rates. The rates of poor people in poor boroughs tend to be higher than those of millionaires in rich boroughs. It is as simple as that. I am amazed that the Opposition have not grasped some of these simple facts before making these taunts about Socialist boroughs.

If I may put this simply to the hon. Member, it is far too soon to judge what is happening as a result of the new organisation of London.

The hon. Member for Worcester asked me to say something about the rate deficiency grant. This was one of the reforms of local government carrying through the pledge of 1955. I think that we shall scrap it. It is another of the things which will go, because it is no good. It has the grave disadvantage of basing the deficiency on rateable values and, in different parts of the country, they represent a strange way of defining need. As a result of saying, "We shall give more money where the rateable values are low and less where they are high" we get a strange situation, that money which should be used to even out need is being used in an arbitrary way. We are thinking about this very carefully and I think that it is probable that rate deficiency grant, for the reasons given by one or two excellent Tory speeches—they were attacking their own side and I am glad that they were so candid about it—will go.

Now I come to the hon. Member for Orpington (Mr. Lubbock), with his Liberal policy. First of all, about empty premises. I think that his calculation is roughly right. We would say that between £20 million and £25 million is the total loss which the rating authorities make on empty premises. My whole feeling is that we should do this, but that we should not overestimate it as a revenue tax. One cannot do this in a
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free country without leaving a man who owns a house which is empty a fair period in which to sell it. There are all kinds of conditions. I agree with the hon. Member that it is time that we penalised the emptiness of houses and offices, and gave people a disincentive from keeping them empty. We should regard this as more of a fine than a revenue method. This is an important change. We are willing to consider it and will try to work it as far as we can.

I have looked at this and I think that there are a great many difficulties in working out a practicable scheme which will be fair to everyone. I am not prepared to accept this simple proposition from the hon. Gentleman.

I was also asked about instalment payments of rates. This is something which the local authorities can do now, and sensible ones are doing it already. All that we hear about is legislation to compel the laggards to come up to the standard of the good authorities. This is something which we shall almost certainly include in any reform of rating which we introduce.

The third proposition was to shift the remaining 40 per cent. of teachers' salaries from the rates to local taxation, bearing in mind that 60 per cent. is already paid from central taxation. We pledged during the election to do this and we still believe in it; but I do not think that it is nearly enough. I have looked at the problem, and I feel that the shift which we need from local to central taxation would be far higher in total value than the kind of money involved by shifting less than 40 per cent. of the teachers' salaries—for we should not be able to shift the whole 40 per cent. if we wanted to leave some power to local authorities. I think that a much bigger operation, which we are contemplating, is required.

One thing which we must define—and the right hon. Gentleman was right about this—is the nature of the shift. I thought that he was a little shifty, in that sense, when he said, "Now that I am in opposition I cannot be asked to say anything
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definite because I have no civil servants at my disposal". I felt that on this issue of the proportion which we should move, he could quite well have offered a suggestion. He has had 10 years in which to study the problem, with all the civil servants and the experts. It is not such a long time since he had their help. I thought that he could have been a little more venturesome in committing his party to a positive suggestion.

The trouble is that, whether we like it or not, during the period of a Conservative Government there was a shift of the burden from taxation to rates. In 1951, the proportion of personal incomes consumed in the rates was 3.1 per cent. and by 1963 it had gone up to 4 per cent., whereas taxes had remained a constant proportion. The increase in the period was all in the rates. This is a fact which we have to face—that the rate burden under the Tories increased faster than it would have done had it been a truly proportional increase.

It is this automatic, inbuilt rate escalation which they allowed to happen which we have to remove from the system. It is no good hon. Members opposite shaking their heads; they let it run year after year. Let no one tell me that they did not notice it. They let it run because they wanted the rates to be used as a deterrent against expenditure on the social services. They said that the general grant was designed to stop extravagance. Having designed it for that purpose, now, six months out of office, they are denouncing it for purely demagogic reasons.

Let me emphasise that this rate irritation would not be so acute had it not been accompanied by a series of other irritations imposed in the period of Conservative Government. Let us take one simple case. In addition to the rates automatically rising by 8 per cent. a year, look what happened to National Insurance contributions in the same period under the arrangements which the Conservatives set up. In 1951, they were 9s. 5d.; in 1952, 10s. 9d.; in 1957,
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13s. 7d.; in 1958, 17s. 6d.; in July, 1958, 18s. 2d.; in 1961, 21s.; in 1963, 26s. 2d.; and in 1965, 31s. 5d.

That is an absolutely steady increase of a poll tax which falls on precisely the same persons. They feel the rates going up; they also feel the poll tax of National Insurance going up. When we remember the automatic rise in rates and the automatic rise in National Insurance contributions we see the importance of halting the automatic rise in both cases as soon as it can be done.

We come to the question of how much of the burden we are to shift. We must estimate it by relating the rates to our national income. If hon. Members look at the rise in the national income they will find that it is up from 100 in 1953, two years after the Tories came to power, to 191 last year. In the same period rates rose from 100 to 265. In other words, rates were rising far faster than production, faster than personal incomes and people were feeling worse and worse off throughout the Tory period. [HON. MEMBERS: "Oh."] Hon. Gentlemen opposite can shout if they wish, but those are the facts. They do not like to hear them.

Having got the analysis clear, we must do several things. We must shift the balance back from the rates to national taxation by an extension of the grants and a change in the grants system. I hope to be able to find—also in order to relieve the rates—other forms of taxation which local authorities can raise in addition to the rates. [HON. MEMBERS: "Oh."] It will also be essential to have special rate assistance for the old, which I have already described.

I must reply to one further question which the right hon. Member for Kingston-upon-Thames put to me fiercely. He asked why, last November and December, I did not do something about the general grant. "Why did not you just increase the general grant and decrease the rates?" he asked. We must, first, consider what would have been the cost involved. To decrease the rates in London

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we would have had to have put £200 million extra into the general grant. [Interruption.] Let me finish. [HON. MEMBERS: "Hear, hear."] As I was saying, it would have meant an extra £200 million being put into the general grant from general taxation.

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That would have meant 6d. on Income Tax, and who really seriously suggests that last November it would have been sane, responsible or sensible to have switched £200 million in that way and add an extra 6d. on Income Tax? [HON. MEMBERS: "The Government did."] It was right for us to put 6d. on Income Tax to look after the pensioners, but it would have been wrong for us to have used £200 million for general grant purposes when only 7 per cent. of it would have gone to the old, the sick and the poor and the rest to those who did not need it. We were absolutely right to do what we did.

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Hon. Gentlemen opposite know perfectly well that had they been in power, faced with the sort of economic crisis which they left to us, they would not have dreamt of doing it. [Interruption.] They know that only too well. They say these things out of pure hypocrisy. They are getting into the habit of systematic hypocrisy and deception. [Interruption.] Everybody knows that last week we had a debate on home loans. My hon. Friends and I were attacked in a way that hon. Gentlemen opposite would never have dreamt of seriously and responsibly doing if they were in office.

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The one thing which we are pledged to do is to maintain sterling and get the economy going. That is the best help we can give to the old-age pensioner. It is the promise we made. It is the basis for carrying out what we said we would do.